Nationwide and Virgin cut mortgage rates as brokers declare home loan ‘price war’

  • Nationwide will cut rates by up to 0.3 percentage points from tomorrow
  • Virgin Money is also cutting rates on some of its products
  • Mortgage brokers are waging a price war as lenders compete for business

Mortgage brokers say a home loan price war is underway after Nationwide Building Society became the latest lender to cut its rates.

From tomorrow, Britain’s largest building society will reduce rates at selected stores by up to 0.3 percentage points.

It means Nationwide will now be home to the lowest fixed rate on the market, with its cheapest five-year fixed contract starting at 4.18 per cent with a fee of £1,499.

Virgin Money is also cutting rates with some home buyers, remortgagers and buy-to-let investors likely to benefit from the changes.

Mortgage cuts: Nationwide is the latest lender to announce it will review mortgages

Today’s announcements follow mortgage rate cuts from Barclays, HSBC, Yorkshire Building Society, Santander and Halifax last week.

Mortgage brokers welcomed the news as another win for borrowers with mortgage interest rates on the decline and prime rate cuts on the horizon.

Jack Tutton, director of SJ Mortgages, told Newspage: “The rate cut momentum continues as Nationwide and Virgin followed several other lenders last week.

“The price war is now well and truly underway. With Nationwide cutting some of its rates by 0.3 per cent, this should prompt more lenders to cut further to stay competitive. This is even more positive news for borrowers.”

Hannah Bashford, director of Model Financial Solutions, added: “The rate battle is over. This can only be good news for borrowers, and hopefully the scramble for the top will mean rates fall below the magical 4 per cent threshold that everyone is so desperate to break.

“If the Bank of England cuts rates in August, it will look like a game, set and match.”

For anyone moving home with a deposit of 40 per cent or more, Nationwide’s top rate on the market will be 4.18 per cent from tomorrow.

However, it comes with a hefty £1,499 product fee, meaning it may not be the cheapest overall.

Santander is also offering 4.2 per cent with a £999 fee and HSBC is offering 4.22 per cent with a £649 fee.

Nationwide is also now offering the lowest two-year fix for home movers with a 40 per cent deposit or more.

Its 4.59% deal is down from 4.79% and comes with a £1,499 fee.

> Find the best rate for you with Money’s mortgage finder

Also cut: Virgin Money has also cut rates on a number of its fixed rate deals aimed at home buyers, home owners and buy-to-let investors

Also cut: Virgin Money has also cut rates on a number of its fixed rate deals aimed at home buyers, home owners and buy-to-let investors

First-time buyers will also benefit from Nationwide’s changes. Those buying with a 25 per cent deposit can now secure a three-year fix at 4.77 per cent with a £999 fee.

Nationwide is also cutting rates on some of its remortgage deals as well as its products aimed at existing customers looking to switch.

Virgin Money’s rate changes are aimed at those buying with smaller deposits – particularly those who need 10 per cent of the purchase price.

But it’s also cutting rates aimed at people remortgaging, with rates starting at 4.54 percent.

However, buy-to-let rates are falling most significantly.

It says some fixed rates with a 1% fee will be cut by 0.12 per cent, starting at 4.55 per cent, while product transfer fixed rates will be cut by up to 0.2 percentage point, starting at 4.49 per cent.

How to find a new mortgage

Borrowers who need a mortgage because their current fixed-rate deal is coming to an end or are buying a home should explore their options as soon as possible.

What if I need a remortgage?

Borrowers should compare rates, talk to a mortgage broker and be prepared to negotiate.

Homeowners can sign a new contract six to nine months in advance, often with no obligation to accept it.

Most mortgage shops allow you to add fees to the loan and only charge them when you draw them. This means borrowers can secure a rate without paying expensive brokerage fees.

Keep in mind that if you do this and don’t pay the fee at completion, the fee amount will accrue interest over the life of the loan, so it may not be the best option for everyone.

What if I buy a house?

Those with agreed home purchases should also try to secure rates as early as possible so they know exactly what their monthly payments will be.

Buyers should avoid overextending themselves and be aware that property prices may fall as higher mortgage rates limit people’s borrowing and purchasing power.

How to compare mortgage costs

The best way to compare mortgage costs and find the right deal for you is to speak to a broker.

This is Money has a long-standing partnership with free broker L&C to provide you with free expert mortgage advice.

Interested in today’s best mortgage rates? Use the This is Money and L&Cs Best Mortgage Rates calculator to view offers that match your home value, mortgage size, terms and fixed rate needs.

If you’re ready to find your next mortgage, why not use L&C’s online mortgage finder. It searches 1,000 offers from over 90 different lenders to find the best deal for you.

> Find the best mortgage deal with This is Money and L&C

However, be aware that rates can change quickly, so if you need a mortgage or want to compare rates, speak to L&C as soon as possible so they can help you find the right mortgage for you.

A mortgage service provided by London & Country Mortgages (L&C) which is authorized and regulated by the Financial Conduct Authority (registered number: 143002). The FCA does not regulate most Buy to Let mortgages. If you default on your mortgage payments, your home or property may be repossessed

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