Nationwide Building Society is cutting rates on most of its fixed mortgages by up to 0.45 percentage points from tomorrow.
Its latest cuts will result in two new best buys available to those moving and switching from another lender to Nationwide.
Nationwide’s cheapest five-year fixed fell 0.2 percentage points to 4.74 per cent, with a £999 arrangement fee.
This is available to movers with a deposit of at least 40 per cent (60 per cent loan to value).
Rate cuts: Nationwide announces new round of cuts to many of its mortgage products
Someone moving home with a £200,000 mortgage paid over 25 years would have monthly payments of £1,139 under the Nationwide deal. without the fee.
The average five-year fixed interest rate in the UK is currently 5.96 per cent, according to Moneyfacts.
That means someone with a £200,000 mortgage and a 25-year term would end up paying £1,284 a month, making the Nationwide deal around £145 cheaper each month than average.
> Find the best mortgage rates to apply for
Nationwide is also launching a new three-year fixed-rate Best Buy mortgage for movers, which charges 4.99 per cent. This deal is 0.45 percentage points below what Nationwide was previously offering.
It will again be available to those who buy with at least a 40 per cent deposit.
First-time buyers who can buy with at least a 40 per cent deposit will also be able to secure a rate of 4.84 per cent with Nationwide if it is fixed for five years.
Those needing a remortgage will be able to apply for a five-year fixed rate of 4.89 per cent at Nationwide, as long as the mortgage amount does not exceed 60 per cent of the property’s value.
A two-year rate of 5.59 per cent is available for those with at least a 25 per cent deposit.
Nicholas Mendes, mortgage technical manager at John Charcol, said: “Each week we see lenders continue to re-evaluate their fixed rate products, which shows no sign of slowing over the next few weeks.
“We’re starting to see a revaluation typically around 0.25% to 0.5%, instead of the nominal 0.10% meaningless cuts.”
“In September I felt there was room for lenders to drop to 4.5 per cent on five-year fixed rates by the end of October, but we have seen lenders like Skipton show innovative ways of creating a prime rate but higher arrangement fees, for to compensate .’
Biennial adjustments remain more expensive
Before interest rates started rising last year, two-year fixed-rate mortgages were generally cheaper than five-year fixed-rate mortgages.
That’s no longer the case, although two-year adjustments are proving increasingly popular with borrowers because they believe interest rates will fall over the next two years.
Nationwide’s best two-year adjustment for first-time buyers will be 5.74% from tomorrow.
These re-mortgages will be able to provide as little as 5.59 per cent on a two-year fix.
The broader market has seen lower two-year corrections. For example, Halifax has a deal for 5.32 per cent and HSBC has a deal for 5.34 per cent.
Skipton Building Society launched a range of two-year fixes yesterday, ranging between 3.59 per cent and 3.35 per cent, but with a hefty 5 per cent mortgage settlement fee.
The market average for two-year fixes, according to Moneyfacts, is currently 6.41 percent.
After the summit? Average fixed mortgage rates appear to be easing somewhat after a series of rate hikes in the first half of the year
This is a result of swap rates, which essentially show what lenders expect interest rates to do in the future.
Swap rates are when two countries exchange interest payments for another. One party agrees to receive a fixed rate payment while the other receives a variable payment.
In the case of mortgages, lenders pay financial institutions to acquire fixed funding over a period of time.
They can be on a range of terms, including terms of one, two, three, five and 10 years, and the price is used to determine the price of the mortgage product to lenders.
Mendes adds: “Because swap rates are based on what the markets think interest rates will be, if they rise then mortgage lenders will increase their prices to preserve their profit margin, or if they rise too quickly , then they may have to stop lending or withdraw products until prices stabilize.
“Markets are currently pricing in higher short-term, two-year money swaps are currently at 5.05 percent, compared to three-year money at 4.81 percent and five-year money at 4.54 percent.
“As a result, two-year fixed rates are priced higher than five-year fixed rates.”
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