Nationwide and Halifax CUT Mortgage Interest Rates: Is This the Beginning of a “Price War” and Will Borrower Costs Continue to Fall?
- Nationwide cut mortgage rates by up to 0.20%
- Halifax discounts apply to mortgages taken out through brokers
- Average fixed rate mortgage rates have continued to fall since November
Major mortgage lenders Nationwide and Halifax have slashed rates as the average cost of a fixed-rate mortgage continues to fall from highs reached last year.
Nationwide has cut interest rates across its range of mortgages to 0.2%, with the cheapest fixed deal now at 4.34%.
The price reductions include low deposit mortgages, aimed at first-time buyers, as well as mortgage products.
Ups and downs: Mortgage rates have been steadily rising since the Bank of England started raising the base rate. They then increased after the mini budget, but are now slowly decreasing
A five-year fixed rate on a 10% deposit mortgage is now 4.79%, with fees of £999, a reduction of 0.1%.
There is also a five-year fixed rate on a deposit mortgage of 40% at 4.34%, reduced by 0.09%. It also comes with a fee of £999.
Follow-up rates also declined to 0.2%, for initial durations of two, three and five years. A two-year trailing rate on a 40% deposit is now 3.79% with a fee of £999, reduced by 0.20%.
This will hopefully trigger a new price war in the mortgage market, and it is time too
Lewis Shaw, Riverside Mortgages
Henry Jordan, Director of Mortgages at the Nationwide Building Society, said: “These latest rate cuts show borrowers that we want to continue to offer some of the most competitive mortgage products on the market, as we seek to support as many people as possible, whether they are buying a new home or paying off their existing home.
The building society has also made a number of rate reductions on its supplemental mortgages, including our green supplemental loan products for those looking to improve the energy efficiency of their homes.
Lewis Shaw, Mortgage, Capital Protection and Release Advisor at brokerage Riverside Mortgages, said: “With the two biggest mortgage lenders cutting rates next week, this will hopefully spark a new price war on the market. mortgage market, and it’s time too.”
Will mortgage rates drop below 4%?
Mortgage rates rose rapidly at the end of last year, thanks to uncertain economic conditions in the UK and the fallout from September’s disastrous mini-budget, but are now slowly falling.
Interest on the average five-year fixed mortgage fell well below 6% to 5.42% as more lenders cut rates.
Two-year fixed-rate transactions now sit at an average of 5.6%, according to Moneyfacts.
But the best deals available right now are heading towards 4%, with rates as low as 4.04% over a 10-year term for those with large deposits.
Halifax has also announced rate reductions across its entire product line for intermediaries. These are rates that are only available to those who go through a broker, rather than directly to the lender.
The bank didn’t say how much its rates were slashed, but the cuts were applied to fixed rates for homebuyers, including first-time buyers, and affordable housing programs, including condominiums, as well as to its line of green home products.
The bank also introduced new three-year fixed rate products for homeowners who need to remortgage. Rates will be available from Monday, January 23.
Shaw added: “We’ve seen fixed rates come down over the past few weeks which has increased activity, so any further cuts would be the medicine the housing market needs to shake off the January blues and jumpstart 2023.”
What to do if you need a mortgage
Borrowers who need to find a mortgage because their current fixed rate contract is coming to an end or because they have agreed to buy a home should explore their options as soon as possible.
This is Money’s best mortgage rate calculator, powered by L&C, that can show you deals that match your mortgage and property value.
What if I need to remortgage?
Borrowers should compare rates and speak to a mortgage broker and be prepared to act to get a rate.
Anyone with a fixed-rate deal ending in the next six to nine months should consider how much it would cost them to remortgage now — and consider entering into a new deal.
Most mortgage transactions allow fees to be added to the loan and they are then only charged at the time of subscription. By doing so, borrowers can secure a rate without paying costly arrangement fees.
What if I buy a house?
Those who have agreed to buy a home should also aim to get quotes as soon as possible, so they know exactly what their monthly payments will be.
Homebuyers should be wary of overstretching and prepare for the possibility of home prices falling from their current high levels, due to higher mortgage rates limiting 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 view offers that match your home’s value, mortgage size, term, and fixed rate needs.
Be aware that rates can change quickly, however, and 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 loan mortgage that’s right for you.
> Check out the best fixed rate mortgages you could apply for