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First Direct and Nationwide join rivals to launch sub-4% mortgages

Rebecca Goodman
Written By:
Rebecca Goodman

Competition in the mortgage market is heating up as both First Direct and Nationwide launch sub-4% deals this week.

They follow a range of other providers now offering sub-4% rates on mortgages including HSBC, Halifax, Yorkshire Building Society and Virgin Money.

First Direct reduced the rate of its five-year fixed mortgages to 3.99% on Tuesday. The mortgage has a fee of £490 and a free valuation.

It has a maximum 60% loan to value (LTV), so you’ll need a 40% deposit, and a higher rate of 4.14% for those with a 75% LTV.

For remortgage borrowers, there are free legal fees thrown in as an added incentive. Both mortgages were named as best buys by Moneyfacts. It also announced interest rate falls across 90 of its other mortgage products.

Nationwide also made a series of cuts to mortgage rates this week and joined the sub-4% club.

It reduced rates across its fixed and tracker mortgages by up to 0.7%. Its five-year fixed rate remortgage at 60% loan to value (LTV), which comes with a £999 fee, was reduced by 0.19% to 3.99%.

The building society also reduced the rates on some of its selected switcher products, which now start at 3.94% after a fall of up to 0.41%. These switcher mortgages are guaranteed to be the same or lower than the remortgage equivalents.

The rate war comes as earlier this month, the Bank of England raised the base rate for the tenth consecutive time to reach 4%. It also said it expects the base rate to rise to 4.5% by mid-2023, falling back to 3.25% in three years’ time.

The latest sub-4% mortgage launches

There has been a lot of movement in the mortgage market in the last few weeks and experts predict more sub-4% deals are on the way. Here are the providers that have launched sub-4% mortgages this month:


HSBC launched the first 3.99% five-year fixed rate mortgage deal since September 2022 at the start of February. Its five-year fixed rate for remortgages comes in at 3.99% for 60% LTV with a £999 fee. The product is available to homeowners who are remortgaging or switching rates.

Virgin Money

Just days after HSBC’s news, Virgin Money launched a five-year fixed rate remortgage deal at 3.95%, at 65% LTV with a £995 fee, reduced by up to 0.25%. It is available through brokers.

The bank also issued a purchase five-year deal with a £1,495 fee which was reduced by up to 0.18% with rates now starting from 3.99% which is also available through brokers only.

Yorkshire Building Society

The next provider to make the move was Yorkshire Building Society which reduced the pricing on its five-year fixed mortgage up to 75% LTV, by 0.25%, bringing it to 3.98%. This is the first sub-4% mortgage available through the mutual since September.

The product is available for remortgage and has a £1,495 fee. It offers the incentives of a free standard valuation and remortgage legal services.


On Wednesday this week Halifax reduced rates on its homebuyer range by up to 0.36%, with deals available via brokers and direct.

Its 10-year fixed rate at 60% LTV fell from 4.35% to 3.99%, while its 10-year fixed rate at 75% LTV was reduced to 4.04% from 4.4%. Both come with a £999 fee and loans are available between £25,000 and £1m.

Is a sub-4% mortgage a good idea?

Any drop in interest rates on mortgages can seem tempting but there is a lot to consider, as we explain in our article on the pros and cons of locking in for a decade.

While a sub-4% mortgage may be a cheaper deal to switch to, rates may fall further. While it’s impossible to guarantee what will happen, if you lock yourself into a five- or ten-year mortgage, for example, you then won’t be able to take advantage of rates if they do fall further, or you may have to pay an early fee to do so.

Many offers are only available through brokers too, so it’s well worth speaking to a broker about your options first.

Mike Staton, mortgage and protection advisor at Staton Mortgages, said: “While these headline rates may appear enticing to a mortgage applicant, swap rates indicate that fixed rates will drop further.

“I don’t see a big uptake from clients who receive advice from a qualified broker for 10-year fixed rates. A lot can happen in this long time frame and you will more than likely find yourself paying a penalty to exit from the mortgage within the fixed period.”

David Hollingworth, associate director, communications, at L&C Mortgages, said: “It is important to consider that in the majority of cases a ten year fix will carry Early Repayment Charges throughout the fixed rate term.

“That could limit flexibility to shop around at a later date, whether that is due to a change in the rate environment or as a result of moving home.”