(LONDON)_Over the recent weeks, competition has intensified between mortgage lenders to offer rates below 1 per cent. Earlier this month, HSBC UK launched a fixed-rate mortgage at 0.94 per cent on a two-year fixed deal, followed by the Trustee Savings Bank which also offered the same ultra-low rate. Accordingly, a financial service provider based in Swindon will become the third to offer a mortgage rate below 1%.
Nationwide Building Society, on Wednesday (21 July), launched its new deal at a five-year fixed rate of 0.99 per cent, which will be offered to those who are looking to move home or obtain a remortgage. According to experts, the deal, which has a £1,499 fee, is the first to be offered with a five-year fixed-rate below 1 per cent in over a decade. However, it is only available for customers with a heft deposit of 40 per cent.
“Nationwide Building Society has ramped up the mortgage rate war by offering the first sub-1% five-year fixed-rate mortgage on to the market,” Rachel Springall, a finance expert at Moneyfacts.co.uk, said. “This comes just a few weeks after we witnessed HSBC cutting its own five-year fixed rates, which includes a low-rate deal priced at 1.06%, a market-leading rate.”
She noted that while this is great news for borrowers who are looking for a low-rate deal, however, it is imperative that the customer considers if this is the most suitable option. “Whether the lowest fixed rate on the market is the most appropriate choice will depend on the loan size and someone’s individual circumstances, so it’s important borrowers weigh up the overall true cost of the deal before they commit,” Springall noted.
Meanwhile, SPF Private Clients’ chief executive Mark Harris claimed that despite increasing competition in the market, it is unlikely that this recent trend will continue. “Just when it looked as though mortgage rates couldn’t possibly go any lower, they have,” he said. “As lenders are cash-rich and eager for business, we wouldn’t bet against others following suit and offering similarly cheap products in coming weeks.”
