Mortgage rates at lowest levels since April as Nationwide offers deal under 4%

Nationwide BS has reduced mortgage rates across its two-, three- and five-year fixed products by up to 0.25 percentage points.

The lowest fixed mortgage rate has now dropped below 4%, according to Moneyfactscompare.co.uk.

This is the first time since April 2024 that borrowers have been able to lock in a mortgage deal below 4%.

Nationwide BS now offers a five-year fixed deal for homemovers at a rate of 3.99%, with a 60% loan-to-value (LTV) and a product fee of £1,499 (on a minimum loan of £300,000).

“We want to maintain our support for all types of borrowers through attractively priced products, whether it be homemovers, first-time buyers or those looking to remortgage or switch their deal,” explained Henry Jordan, Nationwide’s Director of Home.

Meanwhile, Moneyfacts data shows that the lowest two-year fixed rate mortgage at the same LTV is currently at 4.33%, as it has been for the past few months.

With many of the major lenders having cut rates in recent days and weeks, average mortgage rates have also seen significant drops.

The average five-year fixed mortgage is 5.39%, while the average two-year deal sits at 5.79% as of 24 July.

On 22 July, average rates were considerably higher, with a two-year mortgage at 5.88% and a five-year deal at 5.47%.

“Fixed mortgage rates are on the downward trend, which will be a relief to borrowers looking to refinance,” commented Rachel Springall, Finance Expert at Moneyfactscompare.co.uk.

“Since the start of 2024, mortgage rates have been volatile, and in the past few weeks lenders have been reacting to changing swap rates. Mortgage rates could fall further, but it is difficult to tell how quickly and by what margins,” she continued.

Will rates continue to lower?

While there is no expectation for rates to dramatically reduce, the mortgage market is looking more favourable for borrowers than it has done previously, with lower borrowing costs being passed on from lenders.

“Typically, a brand with a large presence in the market that cuts rates can encourage other lenders to review their rates to compete,” explained Springall.

“So as the lowest five-year rates have edged closer to 4% from some of the biggest high street brands (Halifax, Lloyds Bank, Barclays Mortgage, NatWest), the market did appear on course to reveal a sub-4% deal,” she continued.

Borrowers will be hoping that, with Nationwide BS now breaching the 4% threshold, more cuts may be on the horizon.

While these latest reductions may sound like good news for borrowers, many reaching the end of a fixed term may find mortgage rates are still higher than their current deal.

Despite this, locking into a fixed deal is still likely to be a better option for most borrowers than reverting to their lender’s Standard Variable Rate (SVR).

With experts on the fence about the base rate lowering in August, it’s worth comparing mortgage options when you’re ready, instead of hoping for rates to fall significantly lower. Always seek professional advice if you’re unsure and need guidance on your individual situation.