SWAP rates, which are used by lenders to decide how to set their own interest rates, also fell to below 5% leading to expectations more mortgage providers will follow in the footsteps of Nationwide.
It comes following several weeks of mortgage rate reductions and has been hailed as a welcome development by mortgage brokers across the country.
Darryl Dhoffer, founder of Bedford-based The Mortgage Expert, speaking via news agency Newspage said: “The Bank of England pulled the handbrake on Base Rate rises and SWAPS reacted with the two-year fixed below 5%. This is the best news we have heard in months.
“Surely it is a matter of days before lenders react and launch more competitive two-year fixed rate deals, and dare I say it in the coming weeks the Big Six lenders come out with two year deals beginning with a 4. As Delia Smith once said ‘let’s be having you’.”
What are the best mortgage rates today?
Average two-year fixed rates are currently at 6.56%, having fallen from 6.58% yesterday, according to Moneyfacts. Five-year fixes, meanwhile, are averaging 6.06% having dipped from 6.07% yesterday.
Nationwide’s rate cuts, which have come into effect today, mean homeowners who need to borrow up to 75% of their property’s value could be eligible for a rate of 4.94%. It comes with a £999 fee.
But it’s not the only lender with sub-5% rates on offer.
Katie Brain, banking expert at Defaqto, the independent financial information and ratings business, said: “This is great news for borrowers, particularly the half-million borrowers who are coming out of their fixed rate deals in the next few months. We have started to see some fixed rates below 5% which is encouraging.”
As of Thursday 21 September, the best two-year fixed rate for a remortgage was 5.74% with a £490 being offered by First Direct for those who need a 75% loan-to-value (LTV) product, according to Defaqto.”
Aside from Nationwide’s offering, in the five-year fixed rate market the other product being highlighted is Yorkshire Building Society’s mortgage for 85% LTV borrowers.
Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “Yorkshire Building Society has reduced rates across selected fixed deals this week, including its five-year fixed mortgage at 85% loan-to-value.
“Now priced at 5.31% and fixed to 30 November 2028, the deal offers both a free valuation alongside £250 cashback, and borrowers can also add the £495 product fee to the advance of the mortgage. Overall, this product earns an Excellent Moneyfacts product rating.”
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