Nationwide becomes first major high street lender to offer a sub-4% five-year fixed rate
High street lenders Nationwide and HSBC have both announced reductions in their fixed mortgage rates, indicating ongoing competitive strategies in the market.
Nationwide has decreased rates by up to 25 basis points (bps) across its two-, three-, and five-year fixed rate products. The new rates make Nationwide the first major high street lender to offer a five-year fixed rate mortgage below 4%, with its lowest rate now at 3.99%.
For new customers moving home, the five-year fixed rate at 60% loan-to-value (LTV) with a £1,499 fee has been reduced to 3.99%, a 19bps decrease. Other reductions include the five-year fixed rate at 60% LTV with a £999 fee, now at 4.04%, and a no-fee option at 4.24%, reduced by 23bps.
First-time buyers also benefit from these cuts, with the five-year fixed rate at 85% LTV with a £999 fee now at 4.55%, a reduction of 24bps. The two-year fixed rate at 85% LTV with a £999 fee is now 4.95%, down by 19bps. Additionally, for remortgages, the five-year fixed rate at 75% LTV with a £999 fee has been lowered to 4.43%, a 17bps decrease.
Nationwide has extended these reductions to existing customers and switcher rates, with selected rates reduced by up to 0.25%. However, rates on selected two-year tracker products are being increased by up to 15bps.
“These latest rate cuts and the reintroduction of a sub-4% product further reinforce our position as one of the most competitive lenders in the market,” said Henry Jordan, director of home at Nationwide. “We’ve made rate reductions across our fixed rate mortgage range because, as the country’s largest mutual, we want to maintain our support for all types of borrowers through attractively priced products, whether it be home movers, first-time buyers or those looking to remortgage or switch their deal.”
Meanwhile, HSBC has also cut interest rates on its two-, three-, and five-year fixed repayment mortgages by up to 24bps. This marks HSBC’s third rate reduction in the past four weeks.
Examples of the new rates include a five-year fixed rate at 60% LTV for home movers with a £999 fee, now at 4.14%, a reduction of 8bps, and a no-fee option at 4.28%, down by 19bps.
For first-time buyers, the five-year fixed rate at 75% LTV with a £999 fee is now 4.14%, down by 8bps, and at 85% LTV with no fee, the rate is 4.28%, a 19bps decrease. Existing customer rates and buy-to-let remortgage products also saw reductions.
“We’re committed to supporting our customers onto or up the property ladder, which is why we aim where possible to keep our rates competitive,” an HSBC UK spokesperson said. “There are a number of factors that are taken into account when setting mortgage rates, and following a review, we are reducing several hundred rates across all of our residential and buy-to-let ranges, including first-time buyers, home movers, and people looking to re-mortgage from today.”
Nicholas Mendes, mortgage technical manager at independent mortgage broker John Charcol, said the latest rate reduction by the major lenders “is fantastic news for borrowers and signifies a significant change in the mortgage landscape after recent months of increased rates.”
“Nationwide is the first lender to finally breach the 4% benchmark following recent weeks of downward repricing,” he said. “This rate is for purchases only – those remortgaging will need to wait a bit longer before we see rates below 4% as well.
“We will likely see the likes of HSBC look to reprice again to ensure they remain ahead of the pack, potentially resulting in another quick reprice from them.
“Lenders have been busy competitively repricing against each other over the last fortnight, with purchase rates significantly lower than remortgage rates. Purchase rates are highly competitive compared to market pricing. Expect the biggest future reductions to be in remortgage rates, as they still have room to decrease, and any significant reductions are expected in this area.”
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