Britain’s biggest building society reintroduces sub-4% fixed mortgage rates

Britain’s biggest building society is reintroducing sub-4% fixed mortgage rates , in further signs of competition in the market heating up.

The move by Nationwide Building Society comes after several lenders have been cutting the rates they are offering, amid expectations that the Bank of England base rate will start to be cut soon.

From Wednesday, Nationwide will be reducing rates by up to 0.25 percentage points across its two-, three- and five-year fixed-rate products, with its lowest rate standing at 3.99%.

It last offered sub-4% rates in early February.

The new rates include a five-year fixed rate of 3.99% for new customers moving home with a 40% deposit, which also has a £1,499 fee.

A no-fee five-year fixed-rate loan is also available at 4.24% for people with a 40% deposit.

For first-time buyers, Nationwide is offering a five-year fixed rate of 4.55% for people with a 15% deposit for a fee of £999.

However, as part of the shake-up Nationwide is increasing the rates on selected two-year tracker products by up to 0.15 percentage points.

It is also reducing rates for existing customers moving home by up to 0.23 percentage points on selected two-, three- and five-year fixed-rate products and cutting additional borrowing rates by up to 0.25 percentage points on on two-, three- and five-year fixed products.

Henry Jordan, Nationwide’s director of home, said: “As the country’s largest mutual, we want to maintain our support for all types of borrowers.”

According to data from financial information website Moneyfacts, the average two-year fixed homeowner mortgage rate on the market on Tuesday is 5.81%, down from 5.88% on Monday.

The average five-year fixed homeowner mortgage rate is 5.40%, down from 5.47% on Monday.

Rachel Springall, a finance expert at Moneyfactscompare.co.uk, said: “Fixed mortgage rates are on the downward trend, which will be a relief to borrowers looking to refinance.

“There is still much more room for improvement, but it has taken a few months for the lowest fixed mortgage rates to drop below the 4% mark.

“However, as it stands, five-year fixed mortgages are lower than a two-year equivalent, so any borrowers unsure on which to choose would be wise to seek advice to go through their options.

“Since the start of 2024, mortgage rates have been volatile, and in the past few weeks lenders have been reacting to changing swap rates (which are used by lenders to price their loans).

“Mortgage rates could fall further, but it is difficult to tell how quickly and by what margins.

“Typically, a brand with a large presence in the market that cuts rates can encourage other lenders to review their rates to compete, so, as the lowest five-year rates have edged closer to 4% from some of the biggest high street brands, the market did appear on course to reveal a sub-4% deal.

“Borrowers sitting on the fence may remain patient for a little while longer. However, on the flip side, those who feel this might now be their chance could see if they can lock into a deal early, as some lenders will let borrowers do this from three to six months in advance.

“Those waiting for the Bank of England to cut base rate may be crossing their fingers for August, but this has split opinions among economists who are now pointing towards September at the earliest due to stubborn service inflation.”