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"Naughty" Nationwide drops fixed rates but increases tracker margins

Journalist: Justin Moy, Contributing Editor

ended 23. July 2024

Nationwide have just announced fixed rate cuts for most borrowers, starting from Wednesday 24th July (see screen grab). Interestingly, the tracker margins are increasing on the 2-year deals, which one broker described as “naughty” and something that “will leave a bitter taste in the mouths of many”. Newspage asked brokers for their views, bottom.

 

9 responses from the Newspage community

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Emma Jones
Managing Director at Whenthebanksaysno.co.uk
The sub-4% mortgage is back. Even though it will only be available to borrowers with bigger deposits or more equity, the symbolism is powerful and shows the momentum picking up in the mortgage market. Lenders seem to be pricing in a base rate cut in August or, if not, not long after.
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Ben Perks
Managing Director at Orchard Financial Advisers
Naughty Nationwide, dropping rates the day after their latest tranche of existing customer product transfers pass the point of no return. Terrible timing for a cut that will leave a bitter taste in the mouths of many.
For more fortunate borrowers though, this is welcome news and will provide further confidence.
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Darryl Dhoffer
Founder at The Mortgage Geezer
This is a double-edged sword for borrowers. Nationwide's recent announcement offers a cause for celebration for some potential borrowers: reductions on selected fixed-rate mortgages. This move brings welcome news for those seeking stability in their monthly payments. That said, the party atmosphere is dampened by a simultaneous increase in tracker rates, raising questions about Nationwide's motivations. Ordinarily, a rise in tracker rates would signal anticipation of an imminent base rate hike from the Bank of England. However, current economic forecasts suggest this is not on the horizon for 2024. This disconnect between market expectations and Nationwide's actions could be interpreted by some consumers as profiteering. However, the timing of these changes raises eyebrows. Offering lower fixed rates while simultaneously increasing tracker rates creates a perception of opportunism, potentially eroding consumer trust.
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Elliott Culley
Director at Switch Mortgage Finance
It has been a long time since we have seen rate reductions continue to drop for several weeks as they have been. This is good news for borrowers, albeit there is still some way to go to fully ignite the market once again. Many borrowers will be eagerly awaiting the Bank of England base rate decision next week.
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Justin Moy
Managing Director at EHF Mortgages
This is an important move by Nationwide in an attempt to keep up with the other high street lenders who have already repriced in the past week or so. It's another sign suggesting that lenders are anticipating that first base rate cut, and an improvement in Swap rates, and are potentially happy to run with little or no margin for a while. It's disappointing to see tracker margins increasing, a great option for those looking for a temporary position while rates are high, potentially a 0.4% swing overnight against the equivalent 2-year fixed deal.
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Craig Fish
Director at Lodestone Mortgages
Another lender another rate reduction and all in all another bit of good news for borrowers. However, borrowers are fully expectant of the base rate reducing soon, and have started considering tracker rate mortgages as an alternative solution, so to start increasing the rates on these products not only signifies an imminent base rate cut, but more worryingly blatant profiteering.
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Michelle Lawson
Director at Lawson Financial
A rate reduction is always good news for borrowers, however what is puzzling is why there is an increase in the tracker margin? Guessing this is pricing in a bank base rate cut on 1st August, however is this really fair to consumers in a Consumer Duty world to re-price the margin? Fixed rates make the money for lenders as we know, the trackers won't, but people will want trackers with the impending forecast rate cuts.
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Riz Malik
Independent Financial Adviser at R3 Wealth
I think the Bank of England will look past the Taylor Swift effect and cut rates in August and, for many, a cut is already priced in. We need some good news. We have definitely waited long enough.
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Dariusz Karpowicz
Director at Albion Financial Advice
Another round of good news from Nationwide with fixed rate cuts starting from July 24th. While we're all cheering for lower fixed rates, it's interesting to see tracker margins on 2-year deals inching up. This move could be seen as a prelude to an upcoming base rate cut or perhaps just lenders ensuring their margins stay comfortable. Either way, it's a positive trend for borrowers, and let's hope the base rate cut follows soon to give everyone a breather in this competitive market.