Nationwide slashes mortgage rates as hopes of 'rate war' grow

Nationwide, the UK's largest building society, is slashing its interest rates on selected mortgage products starting today amid speculation of a 'rate war'. This move comes as Nationwide continues to lead the way among mortgage lenders ahead of the Bank of England's base rate decision.

As competition heats up among high street banks, Nationwide's interest rates will now dip below 4% from today onwards.

The interest rates on some of its products will be cut by up to 0.25%, with the lowest rate dropping to 3.99% after the reduction. This makes Nationwide the first major lender to offer a five-year fixed-rate mortgage with an interest rate under 4%.

New customers moving home can expect reductions of up to 0.23% across two, three, and five-year fixed-rate products up to 95% LTV. First-time buyers will see reductions of up to 0.24% across two, three, and five-year fixed-rate products up to 95% LTV.

Remortgage customers will also benefit from reductions of up to 0.17% across two, three, and five-year fixed-rate products up to 90% LTV.

At present, the average rate for a two-year fixed deal is closer to 6%, according to MoneyFacts, while the average five-year rate stands at around 5.39%. The last time Nationwide's rates fell below 4% was in February.

Existing customers moving home will also see rate reductions of up to 0.23% on some two, three, and five-year fixed-rate products, those with up to 95% loan-to-value.

Additional borrowing rates on two, three, and five-year fixed products up to 90% loan-to-value are being reduced by up to 0.25%.

Nationwide is set to slash selected two, three and five-year switcher rates up to 95% LTV by as much as 0.25%, with new rates kicking off from a competitive 4.24%. Meanwhile, the banking giant is nudging up rates on some two-year tracker products by 0.15%.

Henry Jordan, Nationwide's Director of Mortgages, has spoken out about the reductions, saying: "As the country's largest mutual, we want to maintain our support for all types of borrowers through attractively priced products, whether it be home movers, first-time buyers or those looking to remortgage or switch their deal."

Mortgage expert Kylie-Ann Gatecliffe told the BBC that this move might signal the beginning of a "rate war" among the big players in the lending market.

Mortgage rates are closely tied to the Bank of England's base rate, and despite these significant cuts, average rates remain at levels not seen by homeowners for over 16 years. Yet, some market analysts are forecasting a potential cut in the central bank's rates at the upcoming meeting on August 1, driven by decreasing inflation.