The war over mortgage prices is deepening as Nationwide recently cut lending rates
A war between mortgage lenders to attract new customers is forcing lending rates and property prices as more and more banks come onto the market with deals below 1 percent.
Loyal to High Street Nationwide is the newest lender to cut rates after launching its lowest new home mortgage deal yesterday.
Britain’s largest building society announced that it would offer new borrowers with a deposit of 40 percent an interest rate of 0.87 percent.
The move comes after the UK property market saw a surprise rebound in August, with the average home price rising nearly £ 5,000 to £ 248,857 in a month.
Mark Harris, CEO of mortgage broker SPF Private Clients, said: “Property prices are rising due to lack of inventory, while cheap loan rates give borrowers the confidence to race for the property of their dreams.”
In addition to Nationwide’s rate cut, Barclays also cut the cost of some of its lending rates, including lowering the interest rate on a two-year tracker mortgage to 0.85 percent. As with the Nationwide deal, borrowers require a 40 percent deposit.
Henry Jordan, Director of Mortgages at Nationwide, said: “As one of the largest lenders in the UK, we are constantly reviewing our interest rates to ensure we can maintain our competitive position in the market.”
A number of large lenders have already announced deals below one percent, with HSBC cutting the interest rate on their two-year fixed product for those with deposits or equity from 40 percent to 0.99 percent.
Platform, the credit arm of the credit union, has cut the interest rate on its 40 percent deposit product to 0.95 percent.