Nationwide will be reducing the interest rates on some of its two, three and five-year fixed rate mortgages from tomorrow.
Rates will be cut by up to 0.12 percentage points, meaning the new lowest rate available with Nationwide will fall to 3.9 per cent.
Reductions will be made for both buyers and those remortgaging to the building society.
Those buying a property with at least a 40 per cent deposit will now be able to secure a two-year fixed rate at 3.9 per cent with a £1,499 fee.
On a £200,000 mortgage being repaid over 25 years that would equate to £1,052 a month, with the fee added to the loan.
For those buying with a smaller deposit the rates are only marginally higher.
Sub-4% rate: Nationwide’s new lowest mortgage rate now stands at 3.9%, with reductions also made for those remortgaging to the mutual
The cheapest two-year fixed rate for someone buying with a 25 per cent deposit is 4.04 per cent with a £999 fee, while the cheapest five-year fixed rate for someone buying with a 15 per cent deposit is 4.29 per cent with a £999 fee.
The lowest remortgage rates start from 3.92 per cent for those prepared to fix for two years.
Why are some lenders increasing mortgage rates?
Nationwide’s cuts go slightly against the grain at the moment.
Three major lenders have increased their fixed rates in the past 24 hours, because financial markets are predicting fewer Bank of England interest rate cuts over the rest of 2025.
Halifax, Accord and Santander have all pushed up rates, with the latter increasing rates by up to 0.13 percentage points on a number of its products.
Fixed-rate mortgage pricing is largely based on Sonia swap rates – the inter-bank lending rate, based on future interest rate expectations.
When Sonia swaps rise sufficiently it often results in fixed mortgage rates going up, and vice versa when they fall.
Over the past month, five-year and two-year Sonia swaps have risen just over 0.2 percentage points which represents a sizeable shift in the wrong direction for mortgage borrowers.
Andrew Montlake, chief executive at broker Coreco told the news agency, Newspage: ‘Lenders are slowly but surely reversing their recent rate cuts in response to rising swap rates.
‘Prospective borrowers may be left bemused by a rising market once more, as many were waiting on the expectation of even lower rates.
‘In a capricious market such as this, it pays to act quickly and lock into a rate first to ensure you get the home of your dreams rather than trying to play the market and risk everything.’
