Nationwide cuts mortgage rates by up to 1%

20 January 2009 / by Rebecca Sargent
Nationwide announced yesterday that it is cutting the price of its fixed rate mortgage products by as much as one per cent.

The announcement is the second from the building society in as many weeks. Earlier this month it revealed it would be cutting its base mortgage rate by the full interest rate cut of 0.5 per cent, making it 3.5 per cent from February 1.

The latest statement from Nationwide Building Society says that with effect from tomorrow the interest rates on its two, three and five year fixed rate mortgage deals will fall by as much as one per cent.

This means that Nationwide fixed rate mortgages will vary between 4.39 per cent for a two year fixed rate with a fee of £995, and 7.09 per cent for a fee-free two year fixed rate deal.

Matthew Carter, divisional director of Nationwide mortgages, said: "Recent reductions in swap rates have enabled us to cut the price of our fixed rate mortgage deals by up to one per cent.

"The financial climate remains volatile so we will continue to monitor market conditions, offering lower mortgage rates and deals where it is prudent to do so."

The Nationwide rate of 4.39 per cent is well below the average 5.18 per cent recorded by for a two year fixed rate mortgage. However, many mortgage lenders have failed to pass on the full benefits of the base rate cut, and the difference between swap rates and mortgage rates has grown from 1.02 per cent in October last year to 2.84 per cent yesterday.

Commenting on this and the potential effects of the Government's latest bank bailout, analyst at, Michelle Slade, commented: "In recent months, lenders have been quick to point out that increased margins are a result of the increased risk that they faced.

"Now that the Government has stepped in to reduce that risk, borrowers will be hoping that not only will banks start to lend again, but that the reduced risk is passed on with lower rates being offered."

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