Nationwide is bringing back sub-4% mortgage rates, a move that further increases competition in the market.
The announcement by Britain’s largest building society follows on from similar changes introduced by several major lenders in recent weeks, amid expectations that the Bank of England base rate will be cut in August.
From July 24, Nationwide will be reducing rates by up to 0.25 percentage points across its two-, three- and five-year fixed-rate products, with the lowest rate starting at 3.99%.
This includes a five-year fixed rate of 3.99% for new customers moving home with a 40% deposit, which comes with a £1,499 fee.
A no-fee five-year fixed-rate loan is also available at 4.24% for people with a 40% deposit.
First-time buyers with a 15% deposit will also be able to apply for a five-year fixed-rate, which has a fee of £999.
Nationwide is also increasing rates on selected two-year tracker products by up to 0.15 percentage points.
The building society will lower rates for existing customer moving home by up to 0.23 percentage points on selected two-, three- and five-year fixed-rate products.
Additional borrowing rates in two-, three- and f0ve-year fixed products will be cut by up to 0.25 percentage points.
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.”
New data released by financial information website Moneyfacts shows that the average two-year fixed homeowner mortgage rate on has fallen to 5.81% on Tuesday, 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.
