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Nationwide goes sub-5% on 2-year fixed rate deal for purchases

ended 08. November 2023

Nationwide is the first lender for months to bring a sub-5% 2-year fixed rate mortgage to market, for purchases and product transfers up to 60% loan-to-value (LTV). The lender is also offering the lowest 5-year deal for purchases at 4.64% with a £999 fee, also up to 60% LTV. Brokers welcomed the move, but said rates need to improve at higher loan-to-values in order to meaningfully stimulate the property market.

Anil Mistry, director at Leciester-based RNR Mortgage Solutions, said this had the ability to give borrowers and the property market a much-needed shot in the arm: “Outstanding news. This is a shot in the arm for both fresh and seasoned borrowers and the broader property market. Let's cross our fingers and hope that other lenders will jump on the Nationwide bandwagon by dropping their rates.”

Craig Fish, director at London-based broker, Lodestone Mortgages & Protection, was also positive: “At long last a lender that’s showing intent. There’s been too much tinkering of late. We now need other lenders to follow suit and also start offering these lower rates to those wanting to remortgage, not just those purchasing. That will really ramp up the competition and make it feel like Christmas has come early. Let’s also hope for rates starting with a 4 at higher LTVs soon.”

Darryl Dhoffer, director at Bedford-based The Mortgage Expert, agreed that rates need to come down at higher loan-to-values: "This is only a muted trumpet call. We need to see more 95% LTV deals under the 6% bar to genuinely assess lender appetite, which I'm afraid is still in the balance. It's an easier call for lenders to reduce rates on low LTV products, as it's less risky. While a 2-year fixed rate under 5% is good, we need to see a rate war on the 90%-95% purchase and remortgage deals, not this flowery stuff at the safe end. It's like playing Donkey Kong with infinite lives at the low end of the LTV market."

But Lewis Shaw, owner at Mansfield-based Shaw Financial Services, said these changes offer borrowers a glimmer of light: “These latest rates from Nationwide are a watershed moment. 2-year fixed rates dipping below the 5% mark, something we've not seen for months, should give people hope that things are heading in the right direction. It should also mean we see other lenders follow suit, leading to a much more competitive market over the next few months when transaction levels drop naturally leading up to Christmas. No, we're not out of the woods yet, and yes, there is still more pain to come for many households about to renew their mortgage over the coming months. However, this may be at least a glimmer of light in what is still a very long tunnel.”

Jamie Thompson, director at Jamie Thompson Mortgages, said more lenders will likely now go sub-5% at lower loan-to-values: “Where Nationwide go many usually follow. I don’t think it will be long before we see most of the high street going sub-5% for low loan-to-value mortgages. I wouldn’t be surprised if we start to see higher loan-to-value mortgage rates dip below 5% in the near future, too.”

Stephen Perkins, managing director at Yellow Brick Mortgages said: "It is exceptional news to finally get a 2-year fixed rate back sub-5% into the market. This shows lender confidence in the short and medium-term lending landscape and will bring more affordable options to home buyers and movers across the country, especially as more lenders hopefully follow suit shortly."

But Ranald Mitchell, director at Norwich-based Charwin Private Clients, said more assertive action is needed rather than the tit-for-tat rate changes we have had of late: "It's Nationwide that have stepped forward to steal the limelight in the latest round of rate cuts, being the first to offer a sub-5% fixed rate for two years. The product is limited to existing customers or purchase cases with a 40% deposit, so isn't exactly inclusive. It is, however, a significant moment as lenders battle it out for the headlines, and other lenders will now follow suit. I would however like to see some serious intent from lenders, namely for someone to step forward with their best rate offers rather than the tit-for-tat gradual grinding down of rates we've been seeing. This would shock the market back into action, which is what everyone wants and needs."

Riz Malik, director at Southend-on-Sea-based R3 Mortgages, said the news could see 2023 end on a high: "A 2-year fixed rate under 5% is a sign of things to come if rates have peaked. The market has remained calm giving lenders such as Nationwide the confidence to price more aggressively. With 2023 drawing to a close, if we have another rate hold before Christmas we might be able to see more borrowers avail themselves of better deals, have some life injected into the market and end the year on a high."

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11 responses from the Newspage community

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This is only a muted trumpet call. Yes, interest rates are down, but the high LTV market remains skewed. Nationwide cuts 2-year fixed rates up to 60% LTV by 0.25 bps but delivers an increase on the 5-year fixed rate deals up to 60% LTV. Meanwhile, switcher products for existing clients see minor reductions from 60% to 90% LTV. Let's hope other lenders take note and reduce their own. We need to see more 95% LTV deals under the 6% bar to genuinely assess lender appetite, which I'm afraid is still in the balance. It's an easier call to reduce rates on low LTV products, as it's less risky. While a 2-year fixed under 5% is good, we need to see a rate war on the 90%-95% purchase and remortgage deals, not this flowery stuff at the safe end. It's like playing Donkey Kong with infinite lives at the low end of the LTV market.
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These latest rates from Nationwide are a watershed moment. 2-year fixed rates dipping below the 5% mark, something we've not seen for months, should give people hope that things are heading in the right direction. It should also mean we see other lenders follow suit, leading to a much more competitive market over the next few months when transaction levels drop naturally leading up to Christmas. No, we're not out of the woods yet, and yes, there is still more pain to come for many households about to renew their mortgage over the coming months. However, this may be at least a glimmer of light in what is still a very long tunnel.
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Outstanding news. This is a shot in the arm for both fresh and seasoned borrowers. Let's cross our fingers and hope that other lenders will jump on the Nationwide bandwagon by dropping their rates.
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Where Nationwide go many usually follow. I don’t think it will be long before we see most of the high street going sub-5% for low loan-to-value mortgages. I wouldn’t be surprised if we start to see higher loan-to-value mortgage rates dip below 5% in the near future, too. Remember, many lenders will let you switch to lower rates before your mortgage completes but after a mortgage offer has been issued. This can allow you to search for a bargain now while the market is quiet and vendors are flexible and still benefit from potentially lower rates in a few months' time when there could be a lot more buyers to complete with.
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A 2-year fixed rate under 5% is a sign of things to come if rates have peaked. The market has remained calm giving lenders such as Nationwide the confidence to price more aggressively. With 2023 drawing to a close, if we have another rate hold before Christmas we might be able to see more clients avail themselves of better deals, have some life injected into the market and end the year on a high.
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It is exceptional news to finally get a 2-year fixed rate back sub-5% into the market. This shows lender confidence in the short and medium-term lending landscape and will bring more affordable options to home buyers and movers across the country, especially as more lenders hopefully follow suit shortly.
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This will be very welcome news for borrowers as well as brokers, that sub-5% floor has been broken for purchases and for existing borrower Product Transfers too up to 60% Loan to Value. There are further improvements to their longer term deals that show Nationwide are keen for business. Without doubt other lenders will follow in the coming days, but this is a really important threshold that has been crossed, giving us all some hope for the future.
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It's Nationwide who has stepped forward to steal the limelight in the latest round of rate cuts, being the first to offer a sub-5% fixed rate for 2 years. The product is limited to existing customers or purchase cases with a 40% deposit, so not exactly inclusive. It is, however, a significant moment as lenders battle it out for the headlines, and other lenders will now follow suit. I would however like to see some serious intent from lenders, namely for someone to step forward with their best rate offers rather than the tit-for-tat gradual grinding down of rates we've been seeing. This would shock the market back into action, which is what everyone wants and needs.
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Fantastic news, and a drop of 0.38% shows how aggressively lenders are having to cut to attract new business in a slow market. The market has definitely turned and this bodes well for 2024.
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Great to see 2-year fixed rates starting with a 4 again. This is a real shot in the arm for the mortgage market, which has been on its knees for a long period. Rates should fall further and purchasers who put off buying over the last year may now start to come back to the market.
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This is just what we have been waiting for, let's hope the rest follow suit.
Lenders need to do their part to stimulate the housing market.
We have many existing clients facing a tough winter, when their deals come to an end, and these headline rates may soften the blow. Keep them coming.