Ben Thompson, managing director at Legal & General Mortgages, said: “The pricing war continues at full pace. This latest move by Nationwide is great to see and also has a different make up, being designed over a four year period not five.
“This rate is so strong, there will doubtless be many borrowers who can now consider exiting an existing deal early and paying any penalties applicable, let alone those with lots of equity that are free to move now."
Thompson said that this would without doubt stimulate more activity. And he added: "Loyalty is something that is often not rewarded properly, so it's nice to see Nationwide giving this some focus as well. Some will however be intrigued by the reduced fees on offer for FTBs who take this, as it's pretty unlikely that many will have a 40% deposit.
“This brings into sharp focus again the fact that this price war for now is all about the lowest risk mortgage borrowers. No lender can be criticised for taking this approach however the overall housing market needs to be freed up at the bottom to really get going again.
“For every £1 spent on housing around £2.80 is generated in the economy and that is exactly what the UK needs now. So pricing wars are great, they will free up disposable income for many fortunate existing borrowers and that in itself will help, however it would be better for the economy if mortgages were made cheaper and more freely available to the many wannabe FTBs, many of whom have been reluctantly renting for too long.
“In time this will happen as lenders start to compete further up the risk curve however we would encourage lenders to make the move now to get the market going again.”
