- Bank of England expected to cut interest rates to salvage ‘no growth’ economy
Nationwide Building Society has announced it is cutting mortgage rates by up to 0.16 percentage points.
From tomorrow, the lender will offer fixed rates as low as 3.54 per cent for those buying with the biggest deposits.
The changes stand to benefit first-time buyers, home-movers and those looking to remortgage or switch their deal and will see rates reduced across two, three and five-year fixed rate products.
This move reverses hikes that Nationwide had announced all but 10 days ago alongside a string of other lenders including Virgin Money, NatWest and Santander.
Best buy: Nationwide’s lowest rate is now 3.54 per cent for new and existing customers looking to move home
Among Nationwide’s new rates is a two-year fix at 3.54 per cent for those moving home with at least a 40 per cent deposit.
This is officially, for now, the lowest rate on the market, albeit it comes with a chunky £1,499 fee.
On a £200,000 mortgage being repaid over 25 years, that would equate to paying £1,117 a month.
The next lowest two-year fixed rate is offered by Santander at 3.55 per cent, with a much lower £749 fee, which is likely to be cheaper overall.
Those moving home with a 15 per cent deposit will also be able to secure a market leading five-year fix at 3.94 per cent with Nationwide, with a £1,499 fee or a two-year fix at 3.78 per cent with a £999 fee.
Emma Jones, managing director at Runcorn-based Whenthebanksaysno.co.uk, thinks it’s great news for borrowers in what has been ‘a strangely quiet week’ in terms of mortgage rate changes.
‘Nationwide have just gone and put the cat among the pigeons,’ said Jones. ‘These are not insignificant cuts and could see other lenders follow suit in the days ahead. Great news for borrowers.’
Babek Ismayil, chief executive at homebuying platform OneDome, said he expects more rate cuts will come.
This is due to an increasing expectation that the Bank of England will need to reduce interest rates to help boost the economy.
While at least one further cut is expected, there are numerous analysts suggesting that the central bank could cut three more times this year, taking interest rates from 3.75 per cent to 3 per cent.
This is based on an expectation that inflation will continue to fall while the economy will continue to struggle.
The UK economy grew in the fourth quarter of last year, but only just by 0.1 per cent, weaker than the expected 0.2 per cent, according to the latest official data from the Office for National Statistics.
‘After the weak GDP data published on Thursday, the pressure must surely be growing on the Bank of England to reduce the base rate if inflation starts to cool,’ said Ismayil.
‘The economy needs it, and borrowers certainly need it. Lenders appear to be factoring the dovish Bank of England mood into their pricing and more cuts from other big names could follow in the days to come.’
Daniel Hobbs, chief executive at the financial advice firm New Leaf Distribution believes this announcement could cause a ‘domino effect’.
He added: ‘It’s felt like they were coming all week from one lender and Nationwide have stepped up to the plate. Next week could deliver more good news for the UK’s borrowers.’