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Banks (Finance)

Mortgage Rates Plummet as Nationwide Cuts Two-Year Deal

Strategic Insights

— 1 min read

Nationwide Building Society has reduced its two-year fixed rate mortgage deal by 0.25 percentage points, with homeowners now able to secure a 4.99pc rate with a £999 fee. This follows a string of rate cuts from other lenders, with Royal Bank of Scotland, NatWest, HSBC, and Virgin Money all slashing their rates earlier in the week. The move has been hailed as a "watershed moment" for the mortgage market, with experts predicting further rate cuts in the coming months.

Key Takeaways:

  • Nationwide has reduced its two-year fixed rate mortgage deal to 4.99pc for new customers with a 40% stake in their home, accompanied by a £999 fee.
  • The move follows a series of rate cuts from other lenders, including Royal Bank of Scotland, NatWest, HSBC, and Virgin Money.
  • Lewis Shaw, of Shaw Financial Services, described the move as a "watershed moment" for the mortgage market, predicting further rate cuts in the coming months.
  • Despite the rate cuts, the average two-year fixed rate deal remains at 6.24pc, according to Moneyfacts-Compare.
  • The Bank of England's governor, Andrew Bailey, insists that interest rates will need to stay high for an extended period to tackle inflation.
  • However, the central bank's chief economist, Huw Pill, has suggested that a rate cut may be possible next year, fueling hopes of a reversal in borrowing costs.
  • The UK economy is experiencing sluggish growth, with a report from PwC predicting a 0.1pc contraction in the third quarter.
  • A poll by the Royal Institution of Chartered Surveyors (RICS) showed new home buyer enquiries fell for the 18th month in a row in October, with a "deeply negative" picture for house prices expected to continue.

Statistics:

  • Average two-year fixed rate mortgage deal: 6.24pc (Moneyfacts-Compare)
  • Nationwide's two-year fixed rate mortgage deal: 4.99pc (Nationwide Building Society)
  • Fee for Nationwide's two-year fixed rate mortgage deal: £999 (Nationwide Building Society)
  • Rate cuts from other lenders: Royal Bank of Scotland, NatWest, HSBC, and Virgin Money
  • Bank of England interest rate: 5.25pc (Bank of England)
  • Time since Bank of England last cut rates: 2 meetings (Bank of England)

Sources:

  • Byline: Adele Cooke and John-Paul Ford Rojas
  • Nationwide Building Society
  • Royal Bank of Scotland
  • NatWest
  • HSBC
  • Virgin Money
  • Moneyfacts-Compare
  • Bank of England
  • Shaw Financial Services
  • PwC
  • Royal Institution of Chartered Surveyors (RICS)

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