The new rate is available for new customers who are moving home and have a deposit of at least 40%.
But the fact the lender is offering this deal at 3.99% is significant – and not only because a price has now fallen below the 4% threshold.
Indeed, some mortgage experts believe a cut to this level could indicate confidence amongst lenders that an interest rate cut could happen as soon as August.
Emma Jones, managing director at Whenthebanksaysno.co.uk, speaking via the Newspage Agency, said: “The sub-4% mortgage is back. Even though it will only be available to borrowers with bigger deposits or more equity, the symbolism is powerful and shows the momentum picking up in the mortgage market.
“Lenders seem to be pricing in a base rate cut in August or, if not, not long after.”
Meanwhile, Nicholas Mendes, mortgage technical manager at John Charcol, said this could set the tone for more lenders to follow in Nationwide’s footsteps.
“Nationwide is the first lender to finally breach the 4% benchmark following recent weeks of downward repricing,” he said.
“This is fantastic news for borrowers and signifies a significant change in the mortgage landscape after recent months of increased rates.”
He added: “We will likely see the likes of HSBC look to reprice again to ensure they remain ahead of the pack, potentially resulting in another quick reprice from them.
“Lenders have been busy competitively repricing against each other over the last fortnight, with purchase rates significantly lower than remortgage rates. Purchase rates are highly competitive compared to market pricing.
“Expect the biggest future reductions to be in remortgage rates, as they still have room to decrease, and any significant reductions are expected in this area.”
This is the first time a mortgage rate has dipped below 4% since April 2024, according to Moneyfactscompare.co.uk.
Its data shows five-year fixed mortgages are currently lower than a two-year equivalent – and the advice to borrowers weighing up whether to opt for a five-year fix over a two-year fix is to seek advice.
Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “Since the start of 2024, mortgage rates have been volatile, and in the past few weeks lenders have been reacting to changing swap rates.
“Mortgage rates could fall further, but it is difficult to tell how quickly and by what margins. Typically, a brand with a large presence in the market that cuts rates can encourage other lenders to review their rates to compete.”
She added: “Borrowers sitting on the fence may remain patient for a little while longer. However, on the flip side, those who feel this might now be their chance could see if they can lock into a deal early, as some lenders will let borrowers do this from three to six months in advance.
“Those waiting for the Bank of England to cut base rate may be crossing their fingers for August, but this has split opinions among economists who are now pointing towards September at the earliest due to stubborn service inflation.”
