Nationwide has confirmed it will cut mortgage rates by up to 0.19% from Tuesday, August 4, in a move brokers describe as “welcome” and expect other lenders to follow this week.
The lender announced on Monday that it is reducing rates across its fixed mortgage range, including products for first-time buyers, home movers, and those remortgaging. The cuts apply to two, three, and five-year fixed rate products, bringing Nationwide's lowest rate down to 4.52%.
Rate cut follows recent increase
This change comes just three weeks after Nationwide raised rates by up to 0.35%. Mortgage rates are priced off swap rates, which have fallen following Donald Trump's promise of new talks on ending the conflict with Iran. Global oil prices also dropped below $85 on Monday, easing inflation fears, although Iran's foreign ministry later denied negotiating with the US.
Carlo Pileggi, Nationwide's head of mortgage products, said: “After a period of increasing swap rates, recent falls have created an opportunity for us to reduce mortgage rates, and we're moving swiftly to ensure new and existing customers can benefit. These rate cuts will benefit a wide range of customers – first-time buyers, new and existing customers moving home as well as those remortgaging to Nationwide.”
Brokers expect other lenders to follow
Stephen Perkins, managing director of Norwich-based Yellow Brick Mortgages, said he expected other lenders to follow suit. He added: “This is a reminder that mortgage pricing can move in both directions. Just a couple of weeks ago we were seeing lenders increase rates as swap rates rose. Now those funding costs have eased, Nationwide has been quick to pass some of that benefit on to borrowers. If swap rates remain lower, I'd expect other lenders to follow. The mortgage market remains highly competitive, so when one major lender moves, others rarely want to be left behind.”
Justin Moy, managing director of Chelmsford-based EHF Mortgages, called the cut “welcome”, adding: “Nationwide are not normally the first to move, but this is a welcome cut after a few weeks of sharp increases in fixed rate pricing. Inevitably other lenders will follow throughout the week, this will be down to improving swap rates given the relative calm in the Middle East over the last few days, coupled with a traditionally quieter time for lenders.”
David Stirling, Independent Financial Adviser at Belfast-based Mint Wealth, also expected other lenders to follow, saying: “After weeks of lenders raising rates in lockstep, Nationwide has had the decency to go the other way. Swap rates have settled and Nationwide is moving fast, cutting fixed rates by up to 0.19% from tomorrow. Others will follow. The mortgage market moves in herds, and right now the herd is heading somewhere more hospitable. The window is open, but it has a habit of closing abruptly, so act accordingly.”
Volatility remains
Nouran Moustafa, practice principal and IFA at Roxton Wealth, noted that mortgage rates remain volatile. She said: “These cuts are modest, but the timing matters. After weeks of upward pressure, Nationwide is effectively signalling that the recent fall in swap rates has created enough breathing room to compete again. I expect other lenders to follow if swaps remain lower, because nobody wants to look expensive when buyer and remortgage demand is still highly rate-sensitive. But this is unlikely to become a straight race to the bottom: funding markets remain volatile, so lenders may cut selectively, protect margins or withdraw deals quickly if conditions reverse. Borrowers should welcome the movement without gambling on endless reductions. A 0.19% cut can still save meaningful money on a large mortgage, but the best deal depends on fees, loan-to-value and circumstances, not the headline rate alone.”
Aaron Strutt, product and communications director at London-based Trinity Financial, said the 3.99% tracker from Barclays looked a better bet than Nationwide's offering. He added: “After a few weeks of mortgage rate hikes across the lenders Nationwide has announced some pricing improvements. The building society's cheapest two-year fix is coming down marginally from 4.54% to 4.52% and the five-year fix is reducing from 4.61% to 4.53%. Its cheapest two-year tracker is staying at 4.09%. Nationwide has clearly been busy given the size of the previous rate hikes that pushed them out of the best buy tables. Hopefully a few more lenders will lower rates again and we can reverse the scale of the price rises we have seen recently. On Friday afternoon the lender Gen H sent a message to brokers saying after last week's swap rate spike, things have “turned right round” meaning the lender could lower rates by up to 0.40%. Many borrowers are not going to fancy paying close to 4.5% for a fixed rate & they will expect that rates will come down again sooner rather than later. The Barclays 3.99% tracker seems to offer the best value at the moment even if there is a base rate hike.”
Rohit Kohli, director of Romsey-based The Mortgage Stop, said he didn't expect rates to fall significantly yet. He added: “Good news – but let's not get carried away. Nationwide's cut reflects a recent dip in swap rates, and they've moved fast to pass it on. More lenders will likely follow if conditions hold. The problem is, they might not. We're in an environment where rates can move sharply based on what politicians say and do, here and abroad. The rollercoaster isn't stopping any time soon – not while that uncertainty persists. Take this reduction for what it is: a positive moment in an otherwise unpredictable market.”
