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Mortgage rate war

Journalist: Callum Mason, i

ended 10. November 2023

With Nationwide dropping 2-year fix rates below 5%, and 5-year fixes even lower, are we likely to see other lenders follow suit, and is this the start of a mini ‘rate war’ given that lenders are competing for business in a tight market, with property sales still low?

12 responses from the Newspage community

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Justin Moy
Managing Director at EHF Mortgages
We have been in a rate war for a number of months now, moving from the dizzy 6% rates in the summer, down to the sub-5% rates launched by Nationwide this week. We all expect to see the remainder of the High Street lenders move to similar rates over the coming weeks given those low activity numbers reported by lenders for new business, heating the tepid market up a bit, and helping the poor borrowers affected.
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David Stirling
Independent Financial Advisor at Mint Wealth
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Katy Eatenton
Mortgage & Protection Specialist at Eatenton Finance
We've been in a rate competition for a while.. I wouldn't say war just yet as no one is making really dramatic moves, SWAP rates are considerably lower than the rates we are seeing being offered. I think we will see bigger jumps at the back end of this month to try and get the last applications in before the end of the year
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Simon Bridgland
Director at Charwin Private Clients
Super news for brokers and clients alike, what a generous Christmas gift, cheaper mortgage deals. Great to have these as a socking filler but how about some main presents to follow. Less stringent credit scoring, lighter stress tests. My list goes on and on. Dear Father Christmas please can I have…sub 5% fixed at a higher loan to value?
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Gareth Davies
Director at South Coast Mortgage Services
As much as we all love rate reductions, there's a sniff of 'headline hunting' coming from some lenders. No doubt the bulk of business being done right now is remortgage and not purchase cases, so it was frustrating to see that the sub 5% deals announced by Nationwide yesterday were only available on purchases or for existing customers switching to a new product. A limited audience for sure!
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Richard Campo
Founder at Rose Capital Partners
It's great to see lenders competing for new borrowers by slashing rates
This is also driven by recent falls in money markets, fuelled by recent positive data on food prices (falling) and wages (rising)
As all other economic data is pretty dire at the moment, with arrears & repossessions up steeply, this could push the Bank of England's hands to cut rates sooner than expected, which will in turn push mortgage rates down further. This cycle could have some way to run so if a borrower is after a fixed rate itv will resemble playing whack a mole!
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Graham Cox
Director at Bridging Hub
Lenders are falling over themselves to drop rates, as they scramble for market share in a very quiet market. So I expect other high street lenders to cut theirs in short order. With most mortgage rates probably starting with a 4, and house prices falling, next year could actually be a decent time to pick up a housing bargain.
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Gary Bush
Financial Adviser at MortgageShop.com
The latest activity from Nationwide Building Society massively fuels the ongoing UK Mortgage Rate War - we expect other lenders to follow suit shortly and then of course expect Nationwide to respond again accordingly. After a nightmare 2023 for mortgage account holders this is truly the news that they all need to make fixed-rate mortgage decision-making more practical, we watch with bated breath.
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Richard Thompson
Director at Abbeydale Mortgages
I feel we will see a slight decrease with lenders wanting to get as much mortgage business in year-end especially with quite a few existing remortgage customers current interest rates ending on the 31st of December but I do not think it will be a drastic decrease in interest rates. Until inflation starts decreasing further and the Bank of England starts reducing the base rate.
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Sabrina Hall
Mortgage Adviser & Protection Adviser at Kind Financial Services
We've seen through this unstable time that lenders have always had an appetite to lend. Unfortunately, when the swap rates were increasing they had to increase the rates to keep the margins however now that these rates are reducing and things are settling down a little that competition and appetite to lend is translating into a reduction in rates. I think initially those rates reductions were slow as lenders seemed to want to keep their card close however now a little more confidence has come back into the market (with house prices stabilising and base rate being held) they seem to be ramping things up now.
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Ben Tadd
Director at Lucra Mortgages
Nationwide is the current frontrunner in the race for market share, their cuts this week have blown the rest of the big six lenders out of the water versus where their fixed rates currently sit. These other big players will now be forced to reduce their rates to compete with the market-leading deals Nationwide is offering. This is now likely to lead to a new mini-rate war in the market with lenders competing for business, which will certainly be welcomed with open arms by mortgage borrowers.
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Anil Mistry
Director and Mortgage Broker at RNR Mortgage Solutions
It seems that the monetary policy of the Bank of England and the prevailing market conditions, marked by high inflation gradually decreasing, could create an atmosphere conducive to lower interest rates from lenders, with Nationwide taking the lead. A potential 'rate war' might be on the horizon as lenders attempt to attract more borrowers. It's akin to a financial chess game, with each move influencing other lenders.