Nationwide has pulled a ‘market-leading’ 10-year mortgage rate for new customers, with its 2.89 per cent fix now only available for existing customers as part of its ‘loyalty’ mortgage initiative.
A week ago, Nationwide formally rolled out the 10-year fix rate which was available at 2.89 per cent up to 60 per cent loan-to-value.
The 10-year fixed rate for mortgages switchers will still be priced at 2.89 per cent with a £999 fee and 2.99 per cent with no fee.
However, despite the cut borrowers can still access the same market leading rate - and at a marginally higher LTV.
David Hollingworth, associate director for communications at broker London and Country Mortgages, told FTAdviser that First Direct also has a 10-year fix at 2.89 per cent up to 65 per cent LTV. Elsewhere, Woolwich has a 2.94 per cent 10-year fix up to 60 per cent LTV.
Henry Jordan, head of mortgages at Nationwide, said the rate cut for new business was a result of an increase in swap rates.
He said: “Customer appetite for 10-year fixed rates continues to grow.
“While Nationwide is responding to the recent rise in swaps rates by increasing the rate on its lower LTV products for new customers, all of our 10-year fixed rates remain competitively positioned in the market.”
For new borrowers, 10-year rates at 60 per cent and 70 per cent LTVs are available at 3.29 per cent with a £999 fee and 3.39 per cent with no fee respectively.
On swap rates, Mr Hollingworth thought it unlikely they had risen significantly in the last six days.
He told FTAdviser 10-year swap rates at the end of February were around the 1.5 per cent to 1.6 per cent mark and this morning they are 1.93 per cent.
He said: “I don’t think that [swap rates] increased in the last week, when the product was launched. [Nationwide] may have happened to have a tranche of funds at a certain rate that allowed them to price that product so competitively.
“If it was taken up quickly that may have forced them to re-think the price or they may just have decided to pull away from it.”
Ray Boulger, senior technical manager at broker John Charcol, added that gilts have been “very volatile”.
“They have to keep that rate for existing customers as part of its loyalty guarantee but not for new business. Gilt yields spiked on Thursday, which then reversed on Friday, therefore they might revisit this next Tuesday when they re-look at rates.
“They will make price changes every Tuesday as part of the guarantee. If yields don’t spike, they may reinstate the deal.”
Nationwide has also cut two-year fixed rates for switchers at 60 per cent, 70 per cent and 90 per cent LTV by 0.1 per cent, starting at 1.44 per cent with a £999 fee.
Five-year fixed rate deals for switchers at 90 per cent LTV start at 3.94 per cent with a £999 fee.
donia.o’loughlin@ft.com
