Home buyers could save hundreds of pounds a year as mortgage lenders cut rates ahead of an expected interest rate decision from the Bank of England. Nationwide Building Society is leading the charge, cutting fixed rates on new loans by up to 0.21 percentage points. As a result its lowest available rate now stands at 3.74%, among the most competitive deals seen in the past two years.
The move follows similar reductions by TSB, which has cut selected deals by up to 0.30%, and Santander, which reduced some fixed rates earlier this week by up to 0.16%. The latest reductions are a boost to hard-pressed borrowers taking out new loans.
A typical homeowner taking out a £200,000 mortgage over 25 years could save up to £450 a year with TSB’s 0.30 percentage point cut, £312 with Nationwide’s 0.21 point cut, or around £240 through Santander’s changes. Shaun Sturgess, director at Swansea-based Sturgess Mortgage Solutions, described Nationwide’s move as “bold but calculated”.
He said: “Nationwide’s decision to cut rates by up to 0.21% is a bold but calculated move. While other lenders like Barclays are increasing rates, Nationwide is clearly positioning itself to capture market share ahead of a potential Bank of England base rate cut.
“With affordability slowly improving—especially thanks to recent lending rule changes—these lower rates give buyers and remortgagers a real chance to act.” Chris Barry, director at Thomas Legal, told Newspage that rate cuts could re-energise the housing market.
“Nationwide’s deep cut could be the spark needed to light the dormant kindling that is the UK buyer right now, » he said. « Stock has been building but the complete absence of buyers in recent weeks has meant many in the industry have been running around like busy fools.
« The property market needed an injection of life and this could prove to be it.” Daniel Hobbs, CEO at New Leaf Distribution, said the timing is key: “It’s a bumpy ride for borrowers at present. While some lenders are cutting rates, others are raising them.
« If we get a rate cut from the Bank of England next week, this could set the stage for a busier than usual August.” Others questioned whether the cuts go far enough. Justin Moy, managing director at EHF Mortgages, pointed out that many first-time buyers will see little benefit from these latest changes.
“It’s interesting to see that rates are somewhat higher for First Time Buyers compared to equivalent Home Movers, and in particular, those using the Helping Hands scheme will see no benefit from the announcement today.” David Stirling, director at Mint Mortgages & Protection, added: “Nationwide haven’t been sourcing competitively in weeks, so this adjustment, albeit welcome, is simply them trying to fight at the top of the rate ratings with the likes of HSBC.”
And Elliott Culley, director at Switch Mortgage Finance, said borrowers should not panic. “Rate increases can cause panic for borrowers, but these moves from Barclays and Santander appear to be more to do with moving out of the spotlight and reducing business levels.
« The move by Nationwide to reduce rates should provide confidence that nothing sinister is occurring here.” With a Bank of England decision due next week, further price shifts are expected.
