Nationwide cuts rates on fixed rate mortgages

In what will surely be greeted with some relief by borrowers Nationwide has announced that it will reduce the rates on its two and five year fixed rate mortgage deals later this week.

The reduction comes into effect on May 16th with Nationwide dividing the reductions between house purchase and remortgage.

For house purchase it is reducing the rate on its two year fixed rate (with £599 fee) from 6.1 per cent to 5.95 per cent. There is also a reduction on its two year fixed rate (no fee) mortgage from 6.5 per cent to 6.35 per cent. And on its five year fixed rate deals the interest rate will be reduced from 6.15 per cent (with a fee of £699) to 5.85 per cent with a fee of £599).

For remortgage and additional borrowing purposes Nationwide is reducing the interest on its two year fixed rate deals to 6.15 per cent (with a £599 fee) from 6.30 per cent (with a £499 fee) , and 6.55 per cent (with no fee) from 6.7 per cent.

For its five year deal it is reducing the interest rate to 5.95 per cent with a £599 fee from 6.15 per cent with a £699 fee. There is also a five year fixed rate (no fee) for existing Nationwide customers changing mortgage available from 5.95 per cent (previously 6.15 per cent).

Matthew Carter, divisional director for mortgages at Nationwide, said recent reductions in money market swap rates meant the building society was able to reduce the rates on its two year and five year fixed rate mortgages. He called it good news for home-buyers, re-mortgage customers and borrowers who are coming to the end of their existing deals.

“Nationwide continues to offer a range of mortgages up to 95% loan to value, including two recently launched deals which offer first time buyers a £300 discount on the reservation fee,” he added.

But Sean Gardner of MoneyExpert.com, said while the cuts were a step in the right direction the biggest struggle for borrowers was not being able to afford a mortgage – but being able to get one.

“Availability remains the problem despite all the government efforts to get lenders lending. The Council of Mortgage Lenders figures today show lending for house buying at their lowest since 1975 and there’s very little hope that things will get better during the rest of the year.”

He added: “If you've not got a substantial deposit nowadays or equity in your house then your choices are still severely limited. On average if you are remortgaging you now need a deposit of 15.5 per cent if you take out a fixed or variable mortgage.

"First time buyers and people renegotiating their mortgage for the first time will be worst affected. When disposable income is already at breaking point for many, it is frankly impossible to see how those with limited savings will find a way to get a foothold on the property ladder.”