July 24th, 2024
In a significant move for the mortgage market, Nationwide, the UK’s largest building society, has stated they will be cutting rates by up to 0.25 percentage points across its two, three, and five year fixed products.
This is headlined by a five-year deal at 3.99%, a figure which will no doubt be a welcome sight for many borrowers looking to refinance amongst the less favourable rates that have been advertised by lenders over the past two years.
Market Landscape
Nationwide’s move comes amid intense competition among lenders. As the Bank of England’s next rate decision approaches, other lenders have also been lowering their rates.
The average five-year fixed homeowner mortgage rate is currently 5.40%, down from 5.47% earlier in the week, while the average two-year fixed rate is 5.81%, down from 5.88%.
Influence on Bank of England Decisions
The Bank of England’s (BofE’s) base rate, which influences mortgage rates, remains at a 16-year high of 5.25%.
The base rate has been at this figure for the last seven consecutive BofE meetings in the hopes of curbing the 11% high inflation rate we saw in September 2022.
In the build up to this month’s general election, inflation gradually approached the government’s 2% target, and had since held steady in the month of June.
This news raises speculation about a potential rate cut on Thursday, 1st August, when the BofE next meet.
A reduction in the base rate could further lower mortgage rates, providing additional relief to borrowers.
The Impact on Borrowers
Around 1.6 million existing borrowers are expected to re-mortgage as their current fixed-rate deals expire.
Many of these borrowers are transitioning from rates below 2%, facing significantly higher repayments on their next home loan.
Nationwide’s new rate offers a glimmer of hope during this challenging period.
Looking Ahead
In conclusion, Nationwide’s new five-year fixed mortgage rate below 4% represents a promising development in the market, offering hope and potential savings for borrowers.
As the mortgage landscape continues to evolve, staying informed will be key to making the most of these changes, especially with the upcoming base rate announcement on Thursday, 1st August, which many hope will bring further rate reductions in light of falling inflation rates.
It remains crucial that borrowers stay informed and consider their options carefully. CMME advisors are on hand to help you make those decisions, and help you secure the best possible rate no matter your circumstances.
Click here to book in with the team and secure your new deal.