Homeowners can lock into new sub-1% mortgage deal for five years
Nationwide Building Society is launching the new 0.99% mortgage deal on Wednesday.
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Homeowners can fix their mortgage rate at below 1% for five years, with a new deal being launched on Wednesday.
Nationwide Building Society said its new deal has a five-year fixed rate at 0.99% and will be available to those looking to move home or remortgage.
A finance expert said it was the first five-year fixed-rate mortgage below 1% she had seen on the market.
The deal has a £1,499 fee and borrowers need a 40% deposit.
Competition between lenders to offer rates below 1% has intensified in recent weeks.
It will be interesting to see how low lenders are prepared to go to grab the spotlight
HSBC UK recently launched its lowest ever mortgage rate at 0.94% on a two-year fixed deal.
Nationwide said it is also reducing rates on Wednesday on other selected mortgages across its two and five-year fixed-rate range by up to 0.40 percentage points.
And the Society is expanding its mortgage offering with the launch of a new three-year fixed-rate mortgage range.
Henry Jordan, Nationwide’s director of mortgages, said: “We are launching the sub-1% five-year fixed-rate mortgage for both new customers and existing members either moving home or switching product, something we feel will give them greater certainty over their payments for a longer period.”
Rachel Springall, a finance expert at Moneyfacts co.uk, said a sub-1% rate for a five-year fixed mortgage is the first Moneyfacts has recorded on its electronic records going back to 2007.
As of Tuesday, a 1.06% rate from HSBC UK was the lowest five-year fixed-rate on the market, she said.
Ms Springall said: “Nationwide Building Society has ramped up the mortgage rate war by offering the first sub-1% five-year fixed-rate mortgage on to the market.
“This comes just a few weeks after we witnessed HSBC cutting its own five-year fixed rates, which includes a low-rate deal priced at 1.06%, a market-leading rate.
“It will be interesting to see after notable reductions have already been made in the two-year fixed market, whether five-year fixed deals will continue to be cut – but regardless this will be great news to borrowers looking for a low-rate deal.
“Whether the lowest fixed rate on the market is the most appropriate choice will depend on the loan size and someone’s individual circumstances, so it’s important borrowers weigh up the overall true cost of the deal before they commit.
“There are now several lenders offering fixed mortgages priced around 1% and with competition continuing now that Nationwide have a five-year fixed mortgage at 0.99%, it will be interesting to see how low lenders are prepared to go to grab the spotlight.”
Mark Harris chief executive of mortgage broker SPF Private Clients, said: “Just when it looked as though mortgage rates couldn’t possibly go any lower, they have…
“As lenders are cash-rich and eager for business, we wouldn’t bet against others following suit and offering similarly cheap products in coming weeks.”