Nationwide, Britain's biggest building society, has cut rates across a raft of products, including its two-year fix for those moving home with a 40 percent deposit, making it the cheapest deal on the market. However, it comes with a hefty £1,499 fee. The mutual is also offering the joint-cheapest five-year fix on the market, with a £999 fee, while Virgin Money will make rate cuts, trimming its two-year and five-year fixed purchase rates.
Rates are falling but experts say this isn't guaranteed to continueBritain's biggest building society is slashing mortgage rates and will now offer the cheapest fixed deal on the market.
Nationwide will cut rates across a raft of products from tomorrow, including its two-year fix for those moving home with a 40 per cent deposit. This will be cut from 4.5 per cent to 4.35 per cent - making it the cheapest deal on the market.
However, it comes with a chunky £1,499 fee. The mutual is also offering the joint-cheapest five-year fix on the market at 4.49 per cent, the same rate that is being offered by rival HSBC. It is also for those buying a new home with 40 per cent to put down, and comes with a £999 fee.
Virgin Money will also make rate cuts, trimming its two-year fixed purchase rates by up to 0.26 per cent, its five-year equivalents by up to 0.24 per cent. It will cut two-year remortgage rates by up to 0.24 per cent, too. It is yet another sign the tide may be turning on mortgage rates, after several weeks of increases brought on by uncertainty around the conflict in the Middle East.
Good news: Mortgage rates have been cut at Nationwide, following similar moves from rivals RELATED ARTICLES Share this article Share Halifax lowered its fixed remortgage rates by up to 0.25 percentage points last week, following cuts by HSBC and First Direct. Nationwide's biggest rate cuts were for first-time buyers. A five-year fix for those with a 10 per cent deposit now costs 4.89 per cent with a £999 fee, which is a 0.36 basis point reduction.
Its two-year fixed rate for first-time buyers with a £999 deposit now costs 4.69 per cent, a 0.26 basis point reduction. Aaron Strutt of mortgage broker Trinity Financial said: 'This is good news. Mortgage rate reductions of up to 0.36 per cent make a real difference to monthly mortgage repayments.
'Nationwide’s lowest two-year fixes for first time buyers with a 10 per cent deposit will start from 4.86 per cent which again looks much more attractive than at previous times in recent months. ' However, other mortgage experts sounded a note of caution that rates could start to rise again at short notice as the economic uncertainty continues.
Gerard Boon, managing director of Boon Brokers, said: 'Nationwide's latest rate cuts are a sign that competition is returning to the mortgage market among the major lenders.
'However, it appears that the majority of mortgage lenders are still hesitant to reduce their interest rates due to the uncertainty around the UK's economy. 'Given that inflation is still well above the Bank of England's 2 per cent target, if the war in Iran does not end over the next few weeks, the Monetary Policy Committee may feel pressure to increase the base rate. This may indirectly increase mortgage rates across the board.
' The average two-year fixed mortgage rate today is 5.77 per cent, according to rates scrutineer Moneyfacts, compared to 5.69 per cent for a five-year fix. Read More I renovated my first home... and made £55,000! First-time buyers opt for fixer-uppers to save money without compromising on location Before the conflict began the average rates were 4.83 and 4.95 per cent, respectively.
On a £200,000 mortgage with a 25-year term, this is the difference between paying £1,165 per month and £1,261 per month on a two-year fix. Emma Jones, managing director at Runcorn-based specialist broker When the Bank Says No, said: 'Last week's momentum has continued into this week, despite no clear evidence that the Middle East conflict is close to being resolved.
'Lenders appear more confident but people considering buying or remortgaging should not get complacent and assume rates will continue to fall because we have seen how quickly things can turn in recent months. ' It is possible that banks are cutting rates in order to tempt in more new customers, according to another mortgage insider, rather than because they see the Middle East conflict being resolved soon.
Omer Mehmet, managing director at Welling-based Trinity Finance, said: 'You sense that lenders are keen to boost their business volumes right now, as the way rates are being cut does not entirely sync with geopolitical events, which remain uncertain.
' How to find a new mortgage Mortgage rates have soared after conflict with Iran has driven up inflation expectations and dashed hopes of interest rate cuts. If you need a mortgage because you are buying a home, or your current fixed rate deal is due to end, you should explore your options as soon as possible. This is Money has a long-standing partnership with fee-free broker L&C, to provide you with expert mortgage advice.
Use This is Money and L&Cs best mortgage rates calculator to show deals matching your home value, mortgage size, term and fixed rate needs. Or use L&C’s online Mortgage Finder to search thousands of deals from more than 90 different lenders to discover the best deal for you. This is Money's mortgage tips What if I need to remortgage? Borrowers should compare rates, speak to a mortgage broker and be prepared to act.
Homeowners can lock in to a new deal six to nine months in advance, often with no obligation to take it. Most mortgage deals allow fees to be added to the loan and only be charged when it is taken out. This means borrowers can secure a rate without paying arrangement fees. If you do this and don't clear the fee on completion, interest will be paid on it over the term of the loan.
What if I am buying a home? Those with home purchases agreed should also aim to secure rates as soon as possible, so they know exactly what their monthly payments will be. Buyers should avoid overstretching and be aware that house prices may fall, as higher mortgage rates limit people's borrowing ability and buying power. What about buy-to-let landlords?
Buy-to-let landlords with interest-only mortgages will see a greater jump in monthly costs than homeowners on residential mortgages. This makes remortgaging in plenty of time essential and our partner L&C can help with buy-to-let mortgages too. >Find your next mortgage deal with This is Money and L&C Mortgage service provided by London & Country Mortgages , which is authorised and regulated by the Financial Conduct Authority . The FCA does not regulate most Buy to Let mortgages.
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