Nationwide cuts rates to sub-3.75 per cent plus other lender moves

Nationwide is set to launch new competitive mortgage products, including a five-year fixed-rate mortgage at 3.74% and two-year fixes starting from 3.89%, undercutting Santander’s current market-leading offerings. These rates are a significant move as lenders compete to attract borrowers, particularly with interest rates falling after a period of high increases.

In addition, Nationwide has expanded its Helping Hand initiative for first-time buyers, now offering lending up to six times a borrower’s income with a 95% loan-to-value (LTV) ratio. This is likely in response to competitors providing mortgages at 5.5 times income, as lenders push to support first-time buyers in an increasingly challenging housing market.

Other major lenders are also cutting rates: NatWest has lowered its two-year fixes to just above 4%, Accord has reduced its fixed rates, and MPowered has made further rate cuts. These reductions come at a time when the market is adjusting to the end of the Bank of England’s aggressive rate hikes, providing some relief to prospective buyers and those looking to remortgage.

Industry comments

Mark Harris, chief executive of mortgage broker SPF Private Clients, says: “Mortgage pricing has breached another barrier with Nationwide launching a sub-3.75 per cent five-year fix. This move will be widely welcomed by borrowers, particularly as other lenders are expected to follow suit.

“Despite the Bank of England holding interest rates this month, lenders continue to compete for business by softening their mortgage pricing. Declining Swap rates, which underpin the pricing of fixed-rate mortgages, are enabling them to offer borrowers more compelling rates.

“Nationwide is also offering extra help for first-time buyers, who are so important to the overall health of the market. Lending up to six times income at 95 per cent loan-to-value, compared with 5.5 times from other lenders, will help those trying to get on the ladder, particularly those buying in higher value areas who might not have the assistance of the Bank of Mum and Dad.

“Two-year fixes are also coming down, giving borrowers who want security over the shorter term increased options.”