Five lenders now offer mortgage rates below 4% after major high street name announces

One of Britain’s biggest lenders is dropping its lowest mortgage rates to below 4 per cent from tomorrow.

Nationwide Building Society will be reducing rates by up to 0.25 percentage points across selected two, three and five-year fixed rate products.

Nationwide’s lowest five-year fixed rate mortgage will fall to 3.99 per cent and will be available to existing customers looking to move to a new deal and to new customers looking to remortgage with at least 40 per cent equity in their home. The product comes with a £999 fee. 

On a £200,000 mortgage being repaid over 25 years, a 3.99 per cent rate will cost someone £1,054 a month. 

Join the sub-4% club: Nationwide is now offering switcher and remortgage rates starting from 3.99 per cent

First-time buyers also stand to benefit from Nationwide’s changes. Its lowest five-year fix for someone buying with a 10 per cent deposit will fall to 4.74 per cent from tomorrow. The deal comes with a £999 fee.

On a £200,000 mortgage being repaid over 25 years a 3.99 per cent rate will cost someone £1,139 a month.

Home movers buying with a 40 per cent deposit will be able to get as low as 4.02 per cent on a five-year fix while those buying with a 15 per cent deposit can secure rates starting from 4.39 per cent. 

> Use our true cost mortgage calculator to compare rates AND fees

Sub 4% mortgage price war 

Nationwide joins four other lenders in offering sub 4 per cent rates.

Santander is currently offering the lowest two-year fix to those buying with the biggest deposit at 3.99 per cent, albeit with a hefty £1,999 fee. The deal is also available to households remortgaging with at least 40 per cent equity.

First Direct is offering a five-year fix at 3.99 per cent to those remortgaging with a much more reasonable fee of £499. 

HSBC is offering a five-year fix at 3.98 per cent, but only to its Premier banking customers.

To qualify as a premier customer borrowers will need to have an individual annual income of at least £100,000 and pay it into an HSBC Premier Bank Account, or have savings or investments of at least £100,000 with HSBC in the UK.

Barclays is also offering home buyers a 3.99 per cent five-year fix. but similar to HSBC it won’t be applicable for many borrowers. 

Borrowers will either need to be Premier Banking customers with Barclays or they will need to be buying an energy efficient home with an energy performance certificate (EPC) of A or B.

More rate cuts to come? 

Mortgage brokers welcomed the announcement as good news for borrowers and the housing market as a whole and believe further reductions could be on the way.

Jamie Elvin, director at Strive Mortgages told the news agency, Newspage: ‘With lenders jostling for market share and the cost of funds falling, further reductions look likely, especially as the month-end approaches and banks push to meet lending targets. 

‘Competition is clearly ramping up, and borrowers could be in for even better deals in the weeks ahead. This isn’t just a one-off adjustment, it’s a sign that rates may have further to fall.’

Pete Mugleston, managing director at Online Mortgage Advisor added: ‘Nationwide’s latest round of rate cuts is more great news for borrowers and reflects increasing competition among lenders as funding costs continue to ease. 

‘With swap rates stabilising, we could see further reductions. However, while rates may edge down in the short term, significant cuts are unlikely. 

‘Instead, we’ll likely see more lenders making incremental cuts to rates as the weeks go on. Borrowers should remain proactive. Waiting too long could mean missing the best deals, as lenders adjust pricing based on demand. 

‘If inflation remains under control and market sentiment stays positive, we may see a gradual softening of rates but not a return to historic lows.’