Mortgage rates drop below 4% at Nationwide but rise at Santander.
By Sarah Taaffe-Maguire, Business reporter @taaffems
The UK’s largest building society is dropping its cheapest mortgage rate to an eight-month low and significantly under the Bank of England’s base interest rate.
From Wednesday, Nationwide will offer new remortgaging customers a 3.84% rate on a five-year fixed deal.
Existing mortgage holders can get the low rate on additional borrowing and switcher deals, also on five-year offers.
New members and first-time buyers can get a slightly higher five-year fixed rate of 3.85%.
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As well as being below the Bank of England’s 5.25% base rate, such an offer is also below the current average five-year mortgage rate, which stood at 5.2% on Tuesday, according to financial information company Moneyfacts.
Henry Jordan, director of home at Nationwide Building Society, said: “These latest changes mean we are now offering sub-4% rates for the first time in eight months.”
But another lender, Santander, is increasing rates on some of its mortgage products.
A number of standard residential fixed rates will rise by up to 0.2% for purchase and remortgage clients, it said.
A Santander spokesman said: “Santander continually reviews its rates based on a number of factors, such as wider market conditions including swap rates.
“We offer a range of competitive mortgage deals with five-year deals starting from 3.99% and two-year deals starting from 4.25%.”
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Mortgage rates had in the summer risen to above 6% for typical fixed deals but have dropped in the last four months as the falling pace of inflation led markets to readjust their expectations of when the Bank would reduce the base rate.
Both the base rate and market expectations affect the mortgage products consumers are offered.
The Bank of England hiked interest rates 14 consecutive times in an effort to tame the double digit pace of price rises seen in the wake of the energy crisis when Russia invaded Ukraine.
Banks and building societies can vary rates based on a variety of factors including the amount of uptake for a given offer and whether it’s a time of year that mortgage holders may be looking to switch or would-be new buyers may be on the hunt.
