Mortgage price war hots up with 3.78% fixed rate from Nationwide

Nationwide today raised the stakes in the increasingly intense mortgage price war with a 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 deal undercut NatWest’s previously market leading 3.83% offer.

The sudden outbreak of “sub-4” deals from some of the biggest lenders on the high street has electrified the mortgage market and is thought likely to bring buyers flooding back to estate agents in the Autumn.

Tony Castle, managing director at PFG Mortgages said “It’s incredible to see rates at 3.78%. Many thought we may not see this until 2025, but they have been proven wrong. This is a huge boost for homeowners and home movers alike. These rate reductions are sprinkling some serious stardust onto the housing market.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, says: “A sub-4 per cent five-year fix is great news for those coming up to remortgage and is the first one that has been available since the end of February.

“Until now, lenders have been targeting home movers with sub-4 per cent rates but competition among the ‘bigsix’ lenders is driving rates lower and now those remortgaging are also seeing the benefit.

“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.

Products such as these will help convince prospective borrowers who have sat on their hands for a while to plunge into the housing market before it becomes too hot and prices inevitably begin to strengthen once more, especially in high-demand areas. The game is on, especially with smaller lenders such as MPowered also shaving their rates.”