Nationwide has announced a fresh round of mortgage rate reductions, cutting some deals by as much as 0.16 percentage points. The move is set to benefit a wide range of borrowers, including first-time buyers, homeowners moving property, and those looking to remortgage or switch their existing deal.
From tomorrow, the lender will introduce fixed-rate mortgages starting from 3.54 per cent for customers with the largest deposits. The changes apply across two-year, three-year and five-year fixed products, offering more competitive options at a time when borrowers have been watching the market closely for signs of relief.
This decision marks a sharp reversal from just over a week ago, when Nationwide joined several major lenders – including Virgin Money, NatWest and Santander – in increasing rates. The latest cuts suggest growing confidence among lenders that borrowing costs may soon begin to ease more broadly.
One of Nationwide’s standout products is a two-year fixed mortgage at 3.54 per cent for customers moving home with at least a 40 per cent deposit. Although this is currently the lowest headline rate on the market, it comes with a sizeable £1,499 product fee. On a £200,000 mortgage repaid over 25 years, monthly payments would work out at around £1,117.
However, borrowers are being urged to look beyond headline rates alone. Santander, for example, is offering a similar two-year fixed deal at 3.55 per cent with a much lower fee of £749, which could make it cheaper overall depending on the size of the loan.
Nationwide has also introduced competitive options for those with smaller deposits. Home movers with a 15 per cent deposit can now access a five-year fixed rate at 3.94 per cent with a £1,499 fee, or a two-year fixed deal at 3.78 per cent with a £999 fee. These products are among the most attractive currently available in their respective categories.
Industry experts believe this move could trigger a fresh wave of reductions across the mortgage market. Emma Jones, managing director at Whenthebanksaysno.co.uk, described the announcement as a bold step after what she called an unusually quiet week for mortgage pricing.
She said Nationwide had “put the cat among the pigeons”, adding that the cuts were significant enough to encourage other lenders to follow suit. In her view, borrowers could see more competitive deals appearing in the coming days.
Babek Ismayil, chief executive of OneDome, also expects further rate reductions to emerge. He linked this trend to increasing expectations that the Bank of England will need to cut interest rates to support the economy.
Analysts are now suggesting the central bank could lower the base rate several more times this year, potentially bringing it down from 3.75 per cent to around 3 per cent. This outlook is driven by signs that inflation is easing while economic growth remains weak.
Recent figures from the Office for National Statistics showed the UK economy expanded by just 0.1 per cent in the final quarter of last year, below the 0.2 per cent many economists had forecast. This has increased pressure on policymakers to consider further monetary support if inflation continues to cool.
Ismayil noted that lenders appear to be pricing in a more cautious, or “dovish”, stance from the Bank of England. He added that both the economy and borrowers would benefit from lower interest rates, and that Nationwide’s move could be the first of several similar announcements from major banks.
Daniel Hobbs, chief executive of New Leaf Distribution, believes Nationwide’s decision could have a ripple effect across the sector. He suggested the market had been primed for cuts all week, and that this announcement could open the door to further reductions in the near future.
For borrowers, this renewed competition offers a welcome opportunity to secure better deals after a long period of rising costs. While fees and eligibility criteria still need careful consideration, the overall direction of travel suggests mortgage pricing may be entering a more favourable phase.
If other lenders follow Nationwide’s lead, the coming weeks could bring increased choice and improved affordability for thousands of households across the UK. This shift may also inject fresh confidence into the housing market at a time when both buyers and sellers have been waiting for clearer signs of stability.
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