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Nationwide reduces tracker and fixed rates

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by Gill Montia
Nationwide reduces fixed rates

Nationwide has reduced the cost of a number of its fixed-rate and tracker mortgages by up to 0.25%.

The lender is offering a two-year fix from 3.78%; three-year from 4.28% and five-year from 4.78%, from 1st April.

All the new loans have a £299 reservation fee for existing customers and a £995 reservation fee for new borrowers.

The building society also has a two-year tracker deal on offer from 3.33%, while its three-year tracker starts at 3.26%.

Abbey, Alliance & Leicester and Woolwich have all launched attractive fixed-rate deals recently and mortgage broker John Charcol warned last week that fixed-rates may have bottomed out.

The firm explained that gilt yields for maturities of five years or more have fallen since the Government embarked on quantitative easing.

The decline will eventually be reflected in the money market swap rates that determine the cost of fixed-rate mortgages.

Homeowners who understand little about gilt yields seem to be following their instincts because Legal & General recently revealed that 72% of residential mortgage borrowers are now choosing a fix, compared to 65% in the last three months of 2008.

The findings suggest that borrowers are not expecting any further cuts in the Bank of England’s base rate, currently at 0.5%.

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News posted: March 31, 2009

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