Mortgage price war hots up with 3.78% fixed rate from Nationwide. HSBC also goes lower with a five year fixed deal at 3.81%
Nationwide today raised the stakes in the increasingly intense mortgage price war with a new 3.78% five year fixed rate deal, the lowest yet seen from a major lending in the current round of cutting.
The rate is only available to borrowers with at least a 40% deposit who need a home loan of at least £300,000 and also carries a £1499 fee.
At the same time HSBC launched a 3.81% five year fix this morning. Both deals undercut NatWest’s previously market leading 3.83% offer.
With markets expecting further rate cuts, we could see a 3.5 per cent five-year fix by the time we get to Christmas, which will be a massive psychological boost for the market.
Andrew Montlake, managing director at brokers Coreco said: “This move from Nationwide marks a new low point in the 5-Year fixed rate battle and shows that the mortgage rate war is now in full flow as lenders look to end the year on a high.
The first Bank Rate cut since 2020 has sparked a welcome late summer boost in buyer activity. The fact that the long-hoped-for first cut has finally arrived, and mortgage rates are heading downwards, is positive for home-mover sentiment. As the summer holiday season comes to an end, the conditions are there for a more active autumn market. The reaction from home-movers to what is hopefully only the first of several rate cuts over the next year or two, combined with other positive data and trends, has led us to raise our price prediction for the year. We now expect new seller prices to rise marginally by 1% over the whole of 2024. This is a relatively small revision from our original prediction of a 1% fall in prices over the year, since we didn’t initially forecast anything more drastic than a slight drop in prices this year.
Buyers and sellers are more optimistic about the outlook for the market, evidenced by the immediate upturn that we’ve seen in activity. However, though optimism around the direction of mortgage rates is justified, the reality is that they are still very high compared with a few years ago, and there will be some who need rates to drop further before their affordability is notably improved. Buyers are still stretched, and so sellers mustn’t get too carried away by the higher buyer activity levels compared with last year, and continue to come to market with a competitive price.
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