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Mortgage wars: Nationwide, Virgin Money and Saffron BS slash rates as two year fixes tumble

Mortgage wars: Nationwide, Virgin Money and Saffron BS slash rates as two year fixes tumble
Your Money
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Your Money

Mortgage rates have been dropping across the board for several weeks and experts note that this trend is likely to continue well into the autumn months.

This week the average two-year fixed rate fell to its lowest level since June, while the average five-year fixed mortgage rate also dropped, standing at 5.43% – down from 5.75% for the same period in 2022.

Nationwide continued the battle to win over potential buyers by cutting its rates across the majority of its fixed mortgages by up to 0.45%.

New borrowers can take advantage of a lowered three-year fix at 60% loan to value (LTV) at 4.99% and five-year fixes have gone down further to 4.74%.

A fee-free two-year fix at 60% LTV has fallen by 0.29% to a headline rate of 5.74% and the mutual’s additional borrowing and switcher rates will plummet by up to 0.45%.

This compares to the average two-year fixed rate of 5.49% at 60% LTV, with the lowest rate across the market at 5.32%, dropping from 5.88% a year ago according to Rightmove’s figures.

Henry Jordan, director of home at Nationwide Building Society said: “As a mutual and one of the largest lenders in the country, we remain as committed as ever to supporting borrowers, which is why, with swap rates continuing their downward trajectory, we’re making yet more rate cuts across the majority of our product range.”

Meanwhile, as well as rising the maximum loan size available for self-build and residential borrowers, Saffron Building Society also reduced rates by up to 0.70% across its two and five-year fixes at 80 and 90% LTV. This reduced rate is available for residential, self-employed, contractor, and buy-to-let borrowers.

All summer, YourMoney.com has reported on the ongoing mortgage rate wars and The West Brom entered the fray by dropping three-year fixed rates by up to 0.30%. The mutual also launched a 5.44% rate for remortgages at 75% LTV, with a fee of £999 and £500 cashback included.

And Virgin Money has reduced rates on buy-to-let remortgage and purchase deals, as well as residential purchase products by up to 0.26%.

Further mortgage rate drops to follow

After another week of rates going down, experts predict there will be more to follow. Rightmove’s Matt Smith said: “The average two-year fixed mortgage rate is now below six for the first time since June, which while still very high compared to the ultra-low levels of recent years, is further evidence of the positive downward trend of fixed rates.

“Average rates continue to fall across all loan to value (LTV) brackets this week, with all rates now lower than this time last year, though this does compare to the post mini-Budget period.”

“While the market remains stable, eyes may soon look to the next sets of economic data, including the upcoming Autumn Statement, and how swap rates respond to this news.

“Nevertheless, we expect the trend of steady rate drops to continue for now, and the next key highlight to look out for will hopefully be a sub-five per cent rate on offer in the important, mass-market 85 per cent LTV bracket.”