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Nationwide, Santander and Virgin cut rates as mortgage prices head toward the ‘sub-5%’ mark

Nick Cheek
Written By:
Nick Cheek
Posted:
Updated:
13/09/2023

The mortgage rate war continues unabated as major high street brands are slashing prices in an attempt to attract borrowers.

Two of the UK’s biggest high street mortgage lenders have slashed prices as swap rates stabilise and the desire to bring back borrowers spur banks and building societies into action.

Nationwide has made cuts of up to 0.29%, with the largest reductions being applied to two and three-year fixes for new borrowers moving home.

This includes a two-year fix at 95% loan to value (LTV) which has gone down from 6.73% to 6.44%. A three-year at 60 per cent LTV has been reduced from 5.78% to 5.64%. Both products have a £999 fee. For first-time buyers, the mutual has made cuts of up to 0.25% across two and three-year fixed products.

The mutual is also cutting rates across its switcher, additional borrowing and existing borrowers moving home by up to 0.14 per cent.

Henry Jordan, director of home at Nationwide Building Society, said: “Swap rates continue to fall allowing us to make further reductions to our mortgages rates.

“These changes demonstrate our continued efforts to support existing members who are coming to the end of their current deal and new customers looking to take a mortgage with the society.”

Meanwhile, Santander has also reduced select residential purchase fixed rates by up to 0.14%. The new products will be for new borrowers and include two, three and five-year fixed options for purchase without a product fee. There will also be first-time buyer exclusive options with no fee and fixed rate terms of two, three and five years.

More brands cut rates

Skipton Building Society started the week slashing its rates on residential, buy-to-let, new build and government scheme product ranges.

Justin Moy, managing director of the independent broker EHF Mortgages, described the reductions as “encouraging.”

He added: “The introduction of the three-year fixed range will interest borrowers and brokers alike, especially with market speculation that rates will stay higher for longer. Tracker margins are priced a little better but the fixed rate reductions are small and are not going to have any significant impact on the market unfortunately.”

Accord also reduced interest rates on its products available at higher loan to values (LTV). It cut rates by up to 0.15% at 95% loan to value (LTV), as rates dropped up to 0.20% at 75% LTV.

Samuel Mather-Holgate, independent financial adviser at Mather and Murray Financial, said the rate decreases mean Accord is confident there will not be “too much of a housing crash.”

Meanwhile, Virgin Money has lowered rates on residential purchase deals across all loan to value tiers by up to 0.69%.

The lender has decreased two and five-year fixed rates purchase exclusives with free valuation and £1,295 fee between 65 and 90% LTV.

This includes its two-year fixed rate at 65% LTV which has gone down by 0.12% to 5.65% and its 75% LTV which has gone down by the same amount to 5.7%.

Its five-year fixed rate at 75% LTV has decreased by 0.1% to 5.13% and at 90% LTV the rate has fallen by 0.14% to 5.46%.

Yorkshire Building Society set the latest trend, cutting fixed and tracker products by up to 0.41% last week, following “positive market noises on interest rates”.

Mortgages move towards sub-5%

Over the last month, lenders have ramped up the rate-cutting trend, and YourMoney.com has reported cuts from lenders large and small. Overall, according to financial data service Moneyfacts, both the average two and five-year fixed rates fell between the start of August and the start of September, to 6.70% and 6.19% respectively.

Rightmove’s mortgage expert Matt Smith noted that, despite a likely rise in the base rate next week, mortgage rates were likely to continue onto their downward trajectory for the short term at least.

He said: “There’s a widely held view that the base rate is now nearing its peak which led to a fall in swap rates falling towards the end of last week, and this could mean we see lenders make more significant mortgage rate cuts in the next few weeks. Swap rates have also responded reasonably positively to today’s unemployment figures and pay growth data.

“All eyes will now look to the upcoming inflation figures, which are likely to have an impact on the next Bank of England base rate decision. As long as the news is in line with market expectations, it’s possible that rate reductions will start to gather pace, and we could see sub-5% rates return to the market for the first time since the end of June.”