Nationwide is the first lender for months to bring a sub-5% 2-year fixed rate mortgage to market, for purchases and product transfers at 60% loan-to-value (LTV).
The lender is also offering the lowest 5-year deal for purchases at 4.64% with a £999 fee, also up to 60% LV.
News agency Newspage sought the views of brokers.
Anil Mistry, director and mortgage broker at RNR Mortgage Solutions:
“Outstanding news. This is a shot in the arm for both fresh and seasoned borrowers. Let’s cross our fingers and hope that other lenders will jump on the Nationwide bandwagon by dropping their rates.”
Lewis Shaw, owner and mortgage expert at Shaw Financial Services:
“These latest rates from Nationwide are a watershed moment. 2-year fixed rates dipping below the 5% mark, something we’ve not seen for months, should give people hope that things are heading in the right direction.
“It should also mean we see other lenders follow suit, leading to a much more competitive market over the next few months when transaction levels drop naturally leading up to Christmas.
“No, we’re not out of the woods yet, and yes, there is still more pain to come for many households about to renew their mortgage over the coming months. However, this may be at least a glimmer of light in what is still a very long tunnel.”
Darryl Dhoffer, mortgage expert at The Mortgage Expert:
“This is only a muted trumpet call. Yes, interest rates are down, but the high LTV market remains skewed. Nationwide cuts 2-year fixed rates up to 60% LTV by 0.25 bps but an increase on the 5-year fixed rate deals up to 60% LTV.
“Switcher products for existing clients see minor reductions from 60% to 90% LTV. Let’s hope other lenders take note and reduce their own. We need to see more 95% LTV deals under the 6% bar to assess lender appetite, which I’m afraid is still in the balance. It’s an easier call to reduce rates on low LTV products, as it’s less risky.”
Craig Fish, director at Lodestone Mortgages & Protection:
“This is what we needed. With this announcement, the festive season has now formally started. Well done Nationwide, the first 2-year fix sub-5% is a milestone. You’ve set the bar high and now we need other lenders to follow.
“All we need now is a lender to offer some good rates to those who wish to remortgage to ramp up the competition as all lenders are currently focused on is buyers.”
Jamie Thompson, mortgage broker at Jamie Thompson Mortgages:
“Where Nationwide go many usually follow. I don’t think it will be long before we see most of the High Street at sub 5% for low loan-to-value mortgages.
“I wouldn’t be surprised if we start to see higher loan-to-value mortgage rates dip below 5% in the near future, too.
“Remember, many lenders will let you switch to lower rates before your mortgage completes but after a mortgage offer has been issued.
“This can allow you to search for a bargain now while the market is quiet and vendors are flexible and still benefit from potentially lower rates in a few months’ time when there could be a lot more buyers to complete with.”
Riz Malik, founder & director at R3 Mortgages:
“A 2-year fixed rate under 5% is a sign of things to come if rates have peaked. The market has remained calm giving lenders such as Nationwide the confidence to price more aggressively.
“With 2023 drawing to a close, if we have another rate hold before Christmas we might be able to see more clients avail themselves of better deals, have some life injected into the market and end the year on a high.”
Stephen Perkins, managing director at Yellow Brick Mortgages:
“It is exceptionally welcome to finally get a 2-year fixed rate back sub-5% into the market. This shows lender confidence in the short and medium-term lending landscape and will bring more affordable options to home buyers and movers across the country, especially as more lenders hopefully follow suit shortly.”
Justin Moy, managing director at EHF Mortgages:
“This will be very welcome news for borrowers as well as brokers, that sub-5% floor has been broken for purchases and for existing borrower Product Transfers too up to 60% LTV.
“There are further improvements to their longer term deals that show Nationwide are keen for business.
“Without doubt, other lenders will follow in the coming days, but this is a really important threshold that has been crossed, giving us all some hope for the future.”
Ranald Mitchell, director at Charwin Private Clients:
“It’s Nationwide who has stepped forward to steal the limelight in the latest round of rate cuts, being the first to offer a sub-5% fixed rate for two years.
“The product is limited to existing customers or purchase cases with a 40% deposit, so not exactly inclusive. It is however a significant moment as lenders battle it out for the headlines, and other lenders will now follow suit.
“I would however like to see some serious intent from lenders, someone to step forward with their best rate offers rather than the tit-for-tat gradual grinding down of rates we’ve been seeing. This would shock the market back into action, what everyone wants and needs.”
Elliott Culley, director at Switch Mortgage Finance:
“Great to see 2-year fixed rates starting with a 4 again. This is a real shot in the arm for the mortgage market, which has been on its knees for a long period. Rates should fall further and purchasers who put off buying over the last year may now start to come back to the market.”
Steven Hargreaves, mortgage and protection adviser at The Mortgage Co:
“This is just what we have been waiting for, let’s hope the rest follow suit. Lenders need to do their part to stimulate the housing market. We have many existing clients facing a tough winter when their deals come to an end, and these headline rates may soften the blow. Keep them coming.”
Graham Cox, founder at Self-Employed Mortgage Broker SEMH:
“Fantastic news, and a drop of 0.38% shows how aggressively lenders are having to cut to attract new business in a slow market. The market has definitely turned and augurs well for the 2024”
