Nationwide has announced that it is cutting prices on its range of tracker and fixed rate mortgages, by up to 0.50 per cent.
The UK's biggest building society is cutting the cost of some of its mortgage range so that it "offers even better value for new borrowers," said Andy McQueen, director of Nationwide mortgages.
"We have a superb range of products for existing customers coming to the end of a Nationwide deal including two and three year fixed rates which are currently among the best in the market compared to remortgage deals offered by other lenders," Mr McQueen continued.
"For these borrowers, we also offer a choice of capped variable rate mortgages from as little as 2.99%. These mortgages are ideal for borrowers who are uncertain about how interest rates will move in the future as they provide assurance that the mortgage rate will not rise above a certain level."
Louise Cuming head of mortgages at moneysupermarket.com welcomes the move from Nationwide, saying that "Any move to cut rates should be seen as a positive step and it is good to see Nationwide raising the competitive stakes."
But, she adds, while the new rates on tracker and fixed rate mortgages are competitive, they are not market leading and therefore will have limited impact on the mortgage market. Those with limited deposits will not benefit from the price cuts, she points out, with the best deals still only available to those with significant deposits.
"Providers must look to offer affordable deals for all borrowers including those with smaller deposits if the mortgage market is to make a full recovery," she said.
Alongside the news that it has cut its rates, Nationwide also said that it will be charging a non-refundable £99 booking fee, which is payable upfront and cannot be added onto the mortgage.
Commenting on the new booking fee, Ms Cuming said it is "interesting to see Nationwide has joined a growing band of lenders charging borrowers an upfront fee in order to secure a product.
"Although at £99 this is not a huge cost, Nationwide obviously wants some commitment that borrowers will see the application through to completion - if borrowers have to pay upfront, they are less likely to drop out part-way through the process."
Without this fee in place, Ms Cuming suggests, borrowers will be less tempted to 'hedge their bets' by making several applications, and, she said, this will have a positive affect on their credit ratings, as they might not realise that making multiple applications in this way can take its toll on their ability to get credit in the future, in addition to the cost faced by lenders when applicants drop out at the last minute.
"With a good credit history being worth its weight in gold at the moment, a small upfront fee might be of as much benefit to the consumer as it is the provider," Ms Cuming concluded.
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