Key Highlights
- Nationwide and TSB cut their mortgage rates to some of the lowest levels since the 2022 Budget.
- The cuts come as other lenders are also reducing their rates, indicating increased competition in the market.
- Falling swap rates have contributed to the reduction in funding costs for fixed-rate mortgages, allowing lenders to trim rates further.
- Experts predict that more mortgage rate reductions will follow due to expectations of base rate cuts and ongoing competition among lenders.
New Mortgage Rate Cuts from Nationwide and TSB
Nationwide and TSB, two prominent UK building societies, have announced further reductions in their mortgage rates. These cuts are notable as they mark some of the lowest rates since the 2022 Budget, according to the latest FT Adviser report.
Nationwide’s Rate Cut
Nationwide is offering mortgage rates as low as 3.64% for those with a 40% deposit and an associated £1,499 fee from tomorrow onwards. This move comes amidst other lenders reducing their rates over the past few days, indicating increased competition in the market.
TSB’s Rate Reductions
Meanwhile, TSB is offering its third rate cut in just a fortnight. The reductions span up to 0.15% on two and five-year fix rates for home purchases only. These cuts reflect the broader trend of lenders lowering their mortgage rates as competition intensifies.
Industry Analysis
According to EHF Mortgages managing director, Justin Moy, these rate reductions represent a move towards some of the cheapest rates since the 2022 Budget, especially for those looking to buy a new property. He stated, “With other high street lenders already dropping their rates over the past few days, there is a little bit of competition, plus greater expectations of base rate cuts on the horizon — good news for mortgage holders at least.”
Lawson Financial director Michelle Lawson echoed this sentiment by urging customers to secure deals while they remain low. She noted, “This is a bonfire bonanza for borrowers with more rate cuts coming from the big guns as a last drive for business before the year end.” Lawson further advised, “Anyone with a mortgage product ending in the next four to six months should seriously consider securing something sooner rather than later before the Budget puts the flames out.”
Contractor Mortgage Services director Ken James highlighted that these announcements represent a “price war” between lenders.
He explained, “Nationwide and TSB slash mortgage rates as competition heats up and funding costs fall.” James continued, “With more lenders announcing cuts, the market is feeling increasingly competitive. Falling swap rates have lowered the cost of funding fixed-rate mortgages, giving lenders room to trim rates and that’s intensifying the price war. With borrowing demand still soft, banks are fighting harder for business.
As soon as one lender cuts, others quickly follow.”
James also noted that these announcements “couldn’t come at a better time” due to uncertainty around the November Budget and the Rachel Reeves’ tax debate still unfolding. He stated, “Lenders and homeowners are eager for some positive momentum to hold on to as they navigate the choppy waters of the housing market and wider UK economy.”
Future Implications
The latest rate cuts from Nationwide and TSB reflect broader trends in the financial markets. With expectations that the Bank of England has finished hiking rates and could even cut at its next meeting, lenders are intensifying their competition to secure business before the year-end.
Industry experts predict that more mortgage rate reductions will follow as banks continue to respond to market conditions and competitive pressures. These changes in interest rates can significantly impact homebuyers and existing mortgage holders, affecting both the affordability of housing and overall financial planning.
