Prominent mortgage lender Nationwide has introduced a groundbreaking two-year fixed-rate mortgage with an interest rate below five per cent, which is a significant development for homebuyers and the property market.
According to mortgage brokers, this offer, priced at 4.99 per cent, is a watershed moment that will provide a much-needed boost to the housing sector.
Furthermore, it signals a positive direction for borrowers. This new offering, available starting Thursday, represents a 0.25 percentage point reduction from the previous rate and is primarily targeted at new customers looking to purchase a home.
However, a key requirement is that borrowers must have a deposit or equity stake of at least 40 per cent. Nationwide has also rolled out two-year fixed-rate options starting at 4.99 per cent for existing customers who wish to switch to a new mortgage deal.
The decision by the Bank of England to maintain interest rates at 5.25 per cent for a second consecutive meeting has contributed to increased stability in the mortgage and housing markets. This decision has led many economists to predict that interest rates will remain at or around this level for the foreseeable future.
Nicholas Mendes, the head of marketing at John Charcol, a mortgage broker, commented on the significance of Nationwide’s new offer. He stated: “It’s been a while since we’ve last seen a two-year fixed-rate mortgage with an interest rate that starts with ‘4’.”
Mendes also noted that a recent drop in gilt yields has affected swap rates, a critical factor in determining fixed-rate mortgage pricing. In response, various high street lenders have quickly adjusted their rates, resulting in a flurry of rate repricing.
It is worth noting that the two-year fixed-rate mortgages with rates below 5 per cent have not been available since around June.
According to data provided by Moneyfacts, the average new two-year mortgage rate decreased to 6.22