Nationwide has become the first lender in months to bring a sub-5 per cent two-year fixed rate mortgage to market in what brokers have called a “watershed moment.”
The lender announced that the sub-5 per cent two-year fix would apply to purchases and product transfers up to 60 per cent LTV.
This was greeted with positivity by Shaw Financial Services owner, Lewis Shaw, who said it was a “watershed moment” and that it should “give people hope that things are heading in the right direction”.
He added this could mean “other lenders follow suit, leading to a much more competitive market over the next few months when transaction levels drop naturally leading up to Christmas”.
However, Shaw acknowledged that “we’re not out of the woods yet” but said this may be a “glimmer of light in what is still a very long tunnel”.
A similar sentiment was shared by Yellow Brick Mortgages managing director, Stephen Perkins, who said: “It is exceptional news to finally get a two-year fixed rate back sub-5 per cent into the market.
“This shows lender confidence in the short and medium-term lending landscape and will bring more affordable options to home buyers and movers across the country, especially as more lenders hopefully follow suit shortly.”
In addition, Lodestone Mortgages & Protection director, Craig Fish, stated: “At long last a lender that’s showing intent. There’s been too much tinkering of late.”
As a result, Fish stated that the market now needs other lenders to “follow suit” and also start offering these lower rates to those wanting to remortgage, not just those purchasing.
“That will really ramp up the competition and make it feel like Christmas has come early. Let’s also hope for rates starting with a four at higher LTVs soon,” he added.
Disagreement
However, not everyone agreed as The Mortgage Expert mortgage expert, Darryl Dhoffer, described the announcement as a “muted trumpet call”.
He added that, while the interest rates are down, the high LTV market remains “skewed”.
“Nationwide cuts two-year fixed rates up to 60 per cent LTV by 0.25 basis points but delivers an increase on the five-year fixed rate deals up to 60 per cent LTV,” he explained.
“Meanwhile, switcher products for existing clients see minor reductions from 60 per cent to 90 per cent LTV.
“Let’s hope other lenders take note and reduce their own.”
Additionally, Charwin Private Clients director, Ranald Mitchell, cautioned that “the product is limited to existing customers or purchase cases with a 40 per cent deposit, so isn’t exactly inclusive”.
Although, Mitchell did also refer to the announcement as a “significant moment as lenders battle it out for headlines” and that, as a result, “other lenders will now follow suit”.
Thanks to the Newspage community for sharing their thoughts with FTAdviser.
tom.dunstan@ft.com
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