One of Britain’s biggest lenders has dropped its mortgage interest rates to below 4%.
Nationwide has reduced mortgage rates by up to 0.25 percentage points across selected two, three and five-year fixed rate products with the new rates effective from today (February 28).
The building society’s lowest mortgage rate is 3.99%, which is available to existing customers looking to move to a new deal and to new customers looking to remortgage.
Nicholas Mendes, mortgage technical manager at John Charcol, said Nationwide is one of four other lenders to offer a rate below 4 per cent including Barclays, First Direct, HSBC and Santander.
Santander, Barclays and First Direct are offering rates of 3.99% while HSBC has a five-year fix at 3.98%.
He said: “This week has seen further downward movement in fixed mortgage rates, with HSBC launching a standout 3.98% deal. While reductions remain modest, they reflect a broader trend of lenders adjusting pricing in response to falling swap rates and shifting market expectations.”
Mr Mendes warned the deals offered by Barclays and HSBC will not be available to most borrowers, as they are only available to existing customers with a current account.
He said: “Another notable development is HSBC’s shift in strategy, with its most competitive rates now restricted to Premier customers.
“Previously, the lender’s best buy deals were available to all borrowers, but eligibility now requires either an annual income of at least £100,000 paid into an HSBC Premier Bank Account or £100,00 plus in savings or investments with HSBC in the UK.
“This move helps HSBC manage service levels while maintaining competitive pricing for select customers. A similar approach has been seen from Barclays, meaning that for borrowers who do not meet the Premier criteria, alternative lenders may now offer more accessible rates.”
Mr Mendes said fixed-rate mortgages were edging lower, adding: “Currently, swap rates have fallen below 4%, marking a significant drop compared to last month. However, the narrow gap between two-year and five-year swap rates means lenders still face constraints in comfortably introducing sub-4% deals, particularly on shorter fixes.
“The decision to fix remains highly individual, but recent lender policy adjustments introduce an additional layer of consideration. HSBC has now shortened its product transfer window to three months, leaving Virgin Money as the only major lender still offering a six-month roll-off period.
“This change limits how far in advance borrowers can secure a rate, meaning those looking to remortgage may need to act more quickly. For those approaching the end of their current deal, locking in a rate sooner rather than later can provide certainty. While some borrowers may prefer to wait for further reductions, there’s always the risk that market conditions shift unexpectedly, potentially reversing the recent trend of falling rates.
“Those seeking more flexibility may still find value in tracker products, particularly where early repayment charges are minimal, but fixed rates remain a strong option for those prioritising stability.”
