A new mortgage price war has broken out giving a boost to home owners and first time buyers.
Major lenders are competing with cuts to their fixed rate mortgage deals to grab a share of a sluggish market.
Nationwide said it is cutting up to 0.2 of a percentage point for new and existing customers. It is bringing its lowest rate down to 3.5% for home movers with a deposit of 40% prepared to pay a £1,499 fee .
The new rates are effective from Thursday 15th January.
For first time buyers rates have been cut by up to 0.17% across two, three and five-year fixed rate products up to 95% loan to value. For debut buyers with a 15% deposit and looking for a two year fix, the best rate is down 0.17% to 3.75%.
Carlo Pileggi, Nationwide’s head of mortgage products, said: “Our first set of rate cuts this year will particularly support first-time buyers onto the property ladder as well as those looking to move to their next home.
“Rates starting at 3.50% for new and existing home movers will come as great news to those looking to move home in 2026.”
Another of the biggest high street lenders HSBC said it will reveal across the board cuts tomorrow. NatWest pushed through some small reductions earlier this week.
The latest round of reductions comes after gilt yields fell at the start of the year. The yield on the benchmark 10 year gilt is down from around 3.55% to 3.37% this month.
Investors hope that faster than expected falls in inflation will allow the Bank of England to push through more interest rate cuts in 2026.
Aaron Strutt of brokers Trinity Financial said: “Nationwide is not messing about with its new market leading two-year fix at 3.5% and 3.70% five-year fix for home movers with 40% deposits.
“We expected to start this year with the lenders cutting their rates and making them more attractive to borrowers and that’s exactly what is happening. Santander recently put its rates up and I suspect they will come down again soon.
These price cuts are good news for borrowers especially with so many looking to get on the property ladder this year or remortgage onto cheaper deals. It is shaping up to be a positive 2026 in terms of price reductions and the 7,000 plus rates available through the banks and building societies. There is no doubt the mortgage lenders are open for business.”
