Nationwide Building Society, the largest in the UK, has announced a significant reduction in mortgage rates, offering new fixed-rate deals starting from just 3.89%.
The move is set to benefit thousands of homebuyers and homeowners across Britain amid an increasingly competitive mortgage market.
From Wednesday, the lower rates will apply to selected two, three, and five-year fixed-rate mortgage products, targeting both first-time buyers and existing homeowners.
The cuts, which reach up to 0.25 percentage points, are expected to make homeownership more accessible and allow some borrowers to secure larger mortgage amounts.
One of the most competitive new offerings includes a two-year or five-year fixed-rate deal at 3.89% for those with a 40% deposit, subject to a £1,499 fee.
This option is open to both existing and new Nationwide customers who are moving home. First-time buyers will also benefit from a two-year fixed rate at 4.09% under the same deposit and fee terms.
The announcement follows recent moves by major banks such as HSBC UK and First Direct, both of which have adjusted their mortgage stress testing rules. These stress rates are used to evaluate whether borrowers could still afford repayments if interest rates were to rise.
HSBC UK estimates that its new affordability assessments could enable up to 20,000 additional customers to qualify for mortgages and borrow higher amounts.
First-time buyers in particular could see an average increase of £39,000 in the size of their mortgage offers. Meanwhile, First Direct’s changes are expected to benefit around 85% of mortgage applicants, potentially increasing borrowing power by an average of £22,000.
Both lenders have also introduced modest rate reductions across a wide range of mortgage products. First Direct, for instance, is applying rate cuts of up to 0.14 percentage points across more than 100 different deals.
The mortgage market continues to evolve, with the Financial Conduct Authority (FCA) currently reviewing lending rules as part of its broader regulatory reform agenda. Proposed changes aim to simplify regulations and improve access to mortgages, particularly for first-time buyers and those with non-standard financial situations.
As more lenders introduce competitive deals and revise affordability criteria, UK homebuyers may find greater flexibility and improved options when applying for a mortgage in the months ahead.
