Nationwide Building Society will cut rates on most of its fixed mortgages by up to 0.45 percentage points from tomorrow.
Its latest cuts will result in two new best buys, available to those moving house and switching from another lender to Nationwide.
Nationwide’s cheapest five-year solution has fallen 0.2 percentage points to 4.74 per cent, with an origination fee of £999.
This is available to those moving home with a deposit of at least 40 per cent (60 per cent loan-to-value ratio).
Rate cuts: Nationwide has announced another round of cuts to many of its mortgage products
Someone moving home with a £200,000 mortgage repaid over 25 years would have monthly payments of £1,139 under the Nationwide deal. not including the fee.
The average five-year fixed rate in the UK is currently 5.96 per cent, according to Moneyfacts.
This means someone with a £200,000 mortgage and a 25-year term would end up paying £1,284 a month, making Nationwide’s deal around £145 cheaper each month than the average.
Nationwide is also launching a new three-year fixed-rate mortgage for house-movers, with a charge of 4.99 per cent. This deal is 0.45 percentage points below what Nationwide previously offered.
It will once again be available to those who purchase with at least a 40 per cent deposit.
First-time buyers who can buy with at least a 40 per cent deposit will also be able to get a rate of 4.84 per cent with Nationwide, if fixed for five years.
Those who need to remortgage will be able to apply for a five-year fixed rate of 4.89 per cent with Nationwide, as long as the mortgage amount does not exceed 60 per cent of the value of the property.
A two-year rate of 5.59 per cent is available, for those with at least a 25 per cent deposit.
Nicholas Mendes, Mortgage Technical Director at John Charcol, says: ‘Every week we see lenders continue to adjust the pricing of their fixed rate products, which show no signs of slowing down over the coming weeks.
‘We are starting to see a price revision that typically ranges between 0.25 and 0.5 percent, rather than the meaningless nominal reductions of 0.10 percent.
“In September, I felt there was scope for lenders to drop five-year fixed rates to 4.5 per cent by the end of October, but we have seen lenders like Skipton show innovative ways to create a blanket rate but with agreement fees higher to compensate.’
Two-year repairs still more expensive
Before interest rates started rising last year, two-year fixed-rate mortgages tended to be cheaper than five-year ones.
This is no longer the case, although two-year arrangements are proving increasingly popular with borrowers because they believe interest rates will fall over the next two years.
Nationwide’s best two-year solution for first-time buyers will be 5.74 per cent from tomorrow.
Those who remortgage will be able to get as little as 5.59 per cent by fixing for two years.
There are lower two-year corrections available throughout the market. For example, Halifax has a 5.32 per cent agreement and HSBC has a 5.34 per cent agreement.
Yesterday, Skipton Building Society launched a series of two-year corrections ranging from 3.59 per cent to 3.35 per cent, but with a hefty 5 per cent underwriting fee.
The market average for two-year corrections, according to Moneyfacts, is currently 6.41 percent.
Beyond the peak? Average fixed mortgage rates appear to be retreating somewhat after a spate of rate increases during the first half of the year.
This is a result of swap rates essentially showing what lenders expect interest rates to do in the future.
Swap rates occur when two parties exchange interest rate payments for another. One party agrees to receive a fixed rate payment, while the other receives a variable payment.
In the case of mortgages, it is what lenders pay financial institutions to acquire fixed financing for a certain period of time.
They can have various terms, including one, two, three, five and ten years, and the cost is used to price the mortgage product for lenders.
Mendes adds: “As swap rates are based on what markets believe interest rates will be, if they rise, mortgage lenders will increase their prices to maintain their profit margin, or if they rise too quickly, they may have to suspend loans or withdraw them. products until prices stabilize.
‘Markets are currently pricing in higher rates in the short term, swaps currently on two-year cash are 5.05 per cent, compared to three-year money at 4.81 per cent and five-year money are of 4.54 percent.
“As a result, two-year fixed rates are priced higher than five-year fixed rates.”
What to do if you need a mortgage
Borrowers who need to find a mortgage because their current fixed-rate agreement is coming to an end, or because they have agreed to purchase a home, should explore their options as soon as possible.
This is Money’s best mortgage rate calculator, powered by L&C, which can show you offers that match the value of your mortgage and your property.
What happens if I need to remortgage?
Borrowers should compare rates and speak to a mortgage broker and be prepared to take action to lock in a rate.
Anyone with a fixed rate deal ending within the next six to nine months should look at how much it would cost to remortgage now and consider striking a new deal.
Most mortgage agreements allow fees to be added to the loan and then only charged when you take out. By doing this, borrowers can lock in a rate without paying expensive origination fees.
What happens if I am buying a house?
Those with agreed-upon home purchases should also try to lock in rates as early as possible, so they know exactly what their monthly payments will be.
Homebuyers should be careful not to overextend themselves and be prepared for the possibility that home prices may fall from their current high levels as higher mortgage rates limit people’s ability to borrow.
How to compare mortgage costs
The best way to compare mortgage costs and find the right deal for you is to talk to a good broker.
You can use our best mortgage rate calculator to show you deals that match your home value, mortgage size, term, and fixed rate needs.
However, be aware that rates can change quickly, so the advice is that if you need a mortgage, compare rates and then speak to a broker as soon as possible, so they can help you find the right mortgage for you. .
> Check the best fixed rate mortgages that you can request
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