[Trending News] Mortgage rates boost as major lender brings out sub-4% offer

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Britain’s biggest building society is chopping some of its mortgage rates to sub-four per cent levels. Nationwide Building Society will be reducing rates by up to 0.25 percentage points across selected two, three and five-year fixed-rate mortgages, with the new rates on offer from Friday.

It is offering rates as low as 3.99 per cent, to existing customers looking to move to a new deal and to new customers looking to remortgage.

The new rates include a “switcher” mortgage for existing Nationwide customers coming to the end of their current mortgage deal at 3.99 per cent, for a five-year term. Borrowers will need a 40 per cent deposit and a £999 fee will apply.

There is also a 3.99 per cent rate for five years for borrowers with a 40 per cent deposit who are looking to remortgage. That deal has a £1,499 fee. The minimum loan size on Nationwide’s £1,499 fee products is £300,000.

Nationwide therefore become the biggest-name lender offering sub-four per cent rates – but there are others on the market at present who are doing similar, albeit some with restrictions.

First Direct are offering a five-year fixed repayment deal at 3.99 per cent, with a £490 booking fee. HSBC and Barclays also have sub-four per cent deals on the line, but with restrictions such as having a £100,000 income or having an energy performance certificate of A or B for their homes.

The move comes after Santander UK recently pulled some of its products with 3.99 per cent rates. The bank removed its 3.99 per cent five-year, fixed-rate mortgage products from sale on Friday last week.

Rachel Springall, a finance expert at Moneyfactscompare.co.uk, said: “It is positive to see one of the biggest lenders in the country cut its fixed mortgages and joining a small number of lenders that offer a sub-4 per cent fixed-rate deal.

“However, it is worth noting, despite grabbing headlines, that the lowest rate mortgages do not always offer the best package. The right choice will depend on someone’s circumstances, so it wise to seek advice before applying.

“There has been a steady flow of rate cuts over recent days, as there have been around a dozen lenders cutting fixed mortgages since the start of this week, good news for borrowers.

“Lenders will no doubt be watching swap rates (which are used by lenders to price mortgages) closely to adjust their future rate expectations in the coming weeks, so it will be interesting to see how long the lowest rates can be sustained for, or indeed, if other lenders make significant cuts.”

Nicholas Mendes, mortgage technical manager at broker John Charcol, said: “Fixed-rate mortgages are continuing to edge lower, mainly due to a notable drop in swap rates, particularly on two- and five-year terms. These have now fallen and remain stable below 4 per cent, marking a significant shift from last month.

“However, the gap between two-year and five-year swaps remains tight, making it difficult for lenders to confidently introduce sub-4 per cent deals, especially on shorter fixes.”

He added: “While further reductions are possible, much depends on whether swap rates remain steady.”