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Nationwide 3.99% mortgage

Journalist: Ruth Emery, Freelance

ended 24. July 2024

I'm writing a story for MoneyWeek about Nationwide's 3.99% 5-yr mortgage. Would be great to get some comment about whether mortgage rates will fall further in the coming months, whether competition is heating up, how low 5-yr and 2-yr mortgage deals could fall to this year… 
Also, what about homeowners looking to remortgage? The 3.99% rate is only available to home movers. Are home mover rates typically lower than remortgage rates? And when can homeowners finally see some better remortgage rates on offer? Do you predict that remortgage rates will tumble as well?

Thanks

5 responses from the Newspage community

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Editor
Justin Moy
Managing Director at EHF Mortgages
The pricing model of lower rates for those moving, rather than remortgaging, has been a tactic from lenders throughout 2024, in their quest to kick-start the homebuying market. This type of business is pivotal to the lending targets of lenders, as risk profiling and property values are at their most accurate when compared to other types of borrowers. Those remortgaging will tend to feel the full benefit later as rates continue to slide for the better.
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Aaron Strutt
Product and Communications Director at Trinity Financial
It is great news that Nationwide has released a sub-4% fix, the first one to hit the market since April. This shows that mortgage pricing is heading in the right direction after such a prolonged period of price hikes.
It is a shame the 3.99% rate is unavailable to first-time buyers or remortgaging customers, but Nationwide probably wants to manage demand.
It seems like there is scope for rates to come down and this may well happen when the Bank of England base rate is finally reduced.
Rates are generally more competitively priced across the market, so while they are much higher than they were, the payment shock for homeowners switching to new deals has reduced in recent weeks.
Nationwide has launched the cheapest two-year fix at 4.41% undercutting Barclays deals. This is a decent rate that many borrowers will find more attractive than the 3.99% fix mainly because expect rates to come down more over the next year or so.
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Editor
Tracey Dixon
Owner/Broker at Pure Mortgage and Protection
Nationwide’s sub-4% fix is a welcome sign of market improvement. After months of rate hikes, this is the first sub-4% deal since April, indicating a positive shift in mortgage pricing.
While it's disappointing that the 3.99% rate is exclusive to homemovers, it's likely a strategic move to manage demand. There’s potential for further rate reductions, especially if the Bank of England cuts its base rate.
Overall, mortgage competition is increasing, leading to more affordable options for homeowners. Nationwide’s new 4.41% two-year fix is a competitive deal, and many borrowers might prefer it to the higher-priced 3.99% option, anticipating further rate decreases in the coming year.
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Elliott Culley
Director at Switch Mortgage Finance
Rates starting with a 3 is a signifcant milestone and one i hope will remain for the foreseeable. Most lenders offer better rates on purchases to remortgages. The purchase market took the biggest hit when rates started to rise, so lenders want to attract potential new customers to homeownership. The sad reality for mortgage holders is they will always pay slightly higher rates as they will need to remortgage regardless.
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Olivia Harland
Senior Mortgage Consultant at Cleerly Limited
As rates fall, affordability for mortgages is increasing for borrowers. With rents becoming unaffordable, there should be increased activity in the property market with new buyers looking to buy rather than rent. This means more demand and competition, which could mean these rates don’t last that long – especially if the base rate doesn’t drop.

If there is a base rate drop of 0.25% in the next few months as predicted by many, we could see 5-year fixed rates as low as 3.5% very soon.
2-year fixed rates are currently priced a bit higher than 5-year fixed rates, but we would expect these to drop by a similar amount. 2-year rates are currently around 0.4% higher than the 5-year fixed rates.

Watch this space in the lead-up top the holiday season in August. Other quiet periods for lenders are December and January, which can be good times for lenders to launch remortgage deals.