Nationwide will increase mortgage charges whereas Barclays cuts two-year fixes

Two major mortgage lenders are repricing their mortgage rates, but in different directions.

From tomorrow, Nationwide Building Society says it will be increasing its fixed rates by up to 0.15 percentage points. Meanwhile, Barclays will cut some of its home loan prices.

Nationwide currently has the cheapest five-year fix at 3.79 per cent, which could be in line for a rise to 3.94 per cent.

The move by Britain’s biggest building society has not come as a surprise to mortgage brokers who feel that it will be trying to lessen demand for its products, to avoid being overrun with applications.

Two major mortgage lenders are repricing their mortgage rates, but in different directions

Elliott Benson, owner at Sett Mortgages said: ‘Nationwide have been leading the lower rate charge for a long time, and sometimes a lender has to increase slightly to maintain its service levels.’

Barclays’ changes represent the first major price cuts by a high street lender since the start of the month.

It will be lowering rates across various fixed rate products by as much as 0.26 percentage points.

It marks a departure from rising mortgage rates in recent weeks, with banks such as Santander, TSB, NatWest, Halifax and Barclays upping home loan costs.

Barclays has focused most of its cuts towards two-year fixes, which are in higher demand among borrowers at the moment.

Last week, Santander revealed 60 per cent of customers are choosing two-year fixed-rate mortgages at present in the hope interest rates will be lower when they come to remortgage in two years’ time.

Less than a quarter of its customers are opting for five-year fixed rate products, even though they are currently cheaper. The remainder are mostly choosing fixes lasting three or ten years, or trackers. 

From tomorrow, Barclays’ lowest two-year fix will reduce from 4.1 per cent to 3.99 per cent, with an £899 product fee. This is for those buying with at least a 40 per cent deposit. 

Those fixing for two years with a 25 per cent deposit will see the best rate available with Barclays fall from 4.3 per cent to 4.12 per cent.

Elliott Culley, director at Switch Mortgage Finance said: ‘This is the first sign that the rate increases seen two weeks ago are starting to be reversed. 

‘Barclays is reducing lower loan-to-value products, which are the products that took the brunt of the increases previously. 

‘There is a feeling of resetting the clock, as recent increases were just a blip and borrowers should have renewed confidence as a result of these changes.’

What will the Budget mean for mortgages?  

Barclays’ recent rate reductions across its mortgage products come at a crucial time, following weeks of Budget speculation and changes in home loan pricing. 

Mortgage brokers welcomed the news. Justin Moy, managing director at EHF Mortgages told the news agency, Newspage: ‘Borrowers with bigger deposits looking for shorter-term deals will be delighted to see sub-4 per cent options back available for purchases, with remortgaging not a million miles behind. 

‘Will this all change after the Budget this week? This week is going to be a potential rollercoaster ride, so grab rates whilst you can just in case.’

There are not expected to be many mortgage or property-related announcements at the Budget. 

However, depending on how the financial markets react to Rachel Reeves’ announcements, there could be an impact on rates.