Best buy home purchase mortgage deals fall below 4%

Best buy mortgage rates have fallen below 4% for the first time since the start of the year.

Nationwide is the first lender to release a home loan below the 4% benchmark following recent weeks of downward repricing.

Rates had fallen below that level earlier this year before concerns emerged about how quickly inflation would drop.

With the cost of living measure now at the 2% target, lenders appear to be more confident, especially if the Bank of England cuts interest rates in the coming months.
Nationwide has dropped its five-year fixed rates, with the lowest now starting at 3.99% for a purchase.

It is the lowest priced deal currently on the market but is still more expensive than the rates of around 3.89% that were on offer earlier this year.

Henry Jordan, Nationwide's director of home, said: “These latest rate cuts and the reintroduction of a sub-four per cent product further reinforce our position as one of the most competitive lenders in the market. 

“We’ve made rate reductions across our fixed rate mortgage range because, 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.”

Commenting on the deal, Nicholas Mendes, mortgage technical manager for broker John Charcol, said: “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.”

Simon Gammon, managing partner at Knight Frank Finance, added: “The arrival of sub 4% mortgages will have a sizeable impact on sentiment, provided other lenders follow. Borrowers generally feel much more comfortable when rates begin with a three, so conditions are primed for a busy autumn.

“That said, it is surprising that lenders are still cutting rates when the latest set of inflation figures failed to show much progress on some of the key points of concern among Bank of England policymakers. It really is a demonstration of how competitive the market is. Margins are already wafer thin, but the lenders are eager to make up for lost ground after months of disappointing levels of activity.

“We can expect rates to fall quite quickly when we do get a meaningful change in the inflation narrative.”