Fixed rate mortgages below 4%!
Exciting news ripples through the UK property market as Nationwide, a major high street lender, breaks the mould by reintroducing five-year fixed rate mortgages below the 4% mark. Find out why this encouraging step is positive for anyone looking to move or invest in property....
Effective from the announcement date on 24th July 2024, Nationwide has reduced rates by up to 0.25% across its 2, 3 and 5 year fixed rate products with its lowest rate now at 3.99%. Nationwide is the first major high street lender to announce the change with other lenders expected to competitively reprice shortly. The bank base rate is currently at 5.25% and the next Bank of England Monetary Policy Committee (MPC) decision on interest rates is on 1 August 2024 which could steer things further in the right direction if an announcement is made.
We take a look at the impact this is likely to have on the property market:
For buying & selling
For sellers contemplating putting their properties on the market, this development comes as a breath of fresh air. The decrease in interest rates on fixed-rate mortgages signifies a shift in the financial landscape, making the prospect of moving more accessible and attractive. As estate agents gear up for increased buyer interest, sellers stand to benefit from a more buoyant market and potentially quicker sales. With Nationwide leading the charge, other major lenders may soon follow suit, offering competitive rates that spur activity in the housing market.
The reduced cost of borrowing can be a decisive factor for potential buyers seeking to make their home ownership dreams a reality. This newfound affordability could translate into increased demand and, in turn, heightened competition for available properties. For sellers, this heightened demand spells good news, potentially leading to quicker sales and better offers.
One of the key advantages of a five-year fixed-rate mortgage is the stability it provides. In an uncertain economic climate, having a fixed monthly payment offers peace of mind to homeowners and buyers alike. This predictability can be a selling point for attracting motivated buyers who value financial security. As sellers prepare to list their properties, it's essential to leverage this opportune moment in the property market. Highlighting the benefits of a stable, low-rate mortgage can attract savvy buyers looking to secure a favourable deal.
For landlords
It also offers landlords some reassurance that it is worth continuing with the investment. Some landlords have made the difficult decision to exit the rental market as a result of rising interest rates which has big impact on supply and demand of renal properties. Rising costs for landlords had forced some to sell their properties, resulting in fewer renal properties and higher rents. The move should reassure existing and prospective landlords that property remains a good investment for both short term returns and the longer term capital gain.
For estate agents
At Sandersons UK, we hadn't recognised a particularly huge drop in enquiries with plenty of people still looking to move, but since the recent election we have already seen a positive shift in mindset which is now only heightened by the interest rates news. While the landscape of the property market is ever-evolving, the recent announcement by Nationwide signals a positive shift that benefits both buyers and sellers. As interest rates on fixed-rate mortgages decrease, the stage is set for a dynamic market where opportunities abound for those looking to sell their properties. By staying informed and proactive, sellers can position themselves to make the most of this exciting development. As a result, now is the ideal time to start talking to agents, comparing their services and how they would market your property along with a valuation.
The new rates summarised:
New customers moving home: reductions of up to 0.23% across two, three, five-year fixed rate products up to 95% LTV, including:
+ Five-year fixed rate at 60% LTV with a £1,4992 fee is 3.99% (reduced by 0.19%)
+ Five-year fixed rate at 60% LTV with a £999 fee is 4.04% (reduced by 0.19%)
+ Five-year fixed rate at 60% LTV with no fee is 4.24% (reduced by 0.23%)
+ Five-year fixed rate at 85% LTV with a £999 fee is 4.50% (reduced by 0.10%)
+ Two-year fixed rate at 80% LTV with a £999 fee is 4.87% (reduced by 0.11%)
First-time buyers: reductions of up to 0.24% across two, three, five-year fixed rate products up to 95% LTV, including:
+ Five-year fixed rate at 85% LTV with a £999 fee is 4.55% (reduced by 0.24%)
+ Two-year fixed rate at 85% LTV with a £999 fee is 4.95% (reduced by 0.19%)
+ Five-year fixed rate at 60% LTV with a £1,499 fee is 4.34% (reduced by 0.20%)
+ Five-year fixed rate at 60% LTV with a £999 fee is 4.39% (reduced by 0.20%)
Remortgage: reductions of up to 0.17% across two, three, five-year fixed rate products up to 90% LTV, including:
+ Five-year fixed rate at 60% LTV with a £1,499 fee is now 4.27% (reduced by 0.08%)
+ Five-year fixed rate at 75% LTV with a £999 fee is now 4.43% (reduced by 0.17%)
+ Two-year fixed rate at 75% LTV with a £999 fee is now 4.79% (reduced by 0.10%)
What to do next...
If you are thinking of moving, our advice would be to start speaking to local agents to book a valuation. Decide what is important to you about the service, compare contract terms, read the Google reviews and look at how their properties are presented online. On the portals look at which photographs are the most eye-catching, have the best descriptions and make it easy for a buyer to make a decision. This will help you decide which agents to request a valuation from.
Speak to an independent mortgage broker as they have the ability to look at all the products on the market rather than limit you to just one high street lender. We can recommend a reputable independent broker who can give you some options on affordability for your onward purchase or buy to let investment. Please click the link to a form below to request a call back.
