In a significant move for the UK housing market, Nationwide, Britain’s largest building society, has announced cuts to its mortgage rates, bringing them down to as low as 3.89 percent. This change, effective from Wednesday, April 30, 2025, applies to a selection of two, three, and five-year fixed-rate mortgages aimed at both first-time buyers and existing homeowners.
The new rates include a two-year or five-year fixed rate at 3.89 percent for borrowers with a 40 percent deposit, accompanied by a £1,499 fee. For first-time buyers, a two-year fixed-rate mortgage will be available at a slightly higher rate of 4.09 percent, also for those with a 40 percent deposit and the same fee. These reductions, which reach up to 0.25 percentage points, could make home ownership more accessible and potentially enable borrowers to secure larger loans.
Nationwide’s decision comes on the heels of similar announcements from HSBC UK and First Direct, both of which have also made adjustments to their mortgage offerings. HSBC UK, for instance, has revised its stress rates—used to assess whether borrowers can afford their mortgages should interest rates rise—potentially allowing an additional 20,000 customers to qualify for loans. According to HSBC UK, the average increase in offer for first-time buyers could be around £39,000.
Oli O’Donoghue, head of mortgages at HSBC UK, stated, “By carefully reviewing our affordability calculations, allowing more customers to meet affordability criteria and potentially access increased borrowing amounts, we are aiming to ease some of the pressure on prospective buyers.”
First Direct has also announced changes that could benefit approximately 85 percent of mortgage applicants, enabling them to borrow an average of £22,000 more. They are applying rate reductions of up to 0.14 percentage points across more than 100 products, further enhancing the competitive landscape for mortgage lending.
Liam O’Hara, head of mortgages at First Direct, remarked, “The changes will benefit the vast majority of our existing customer base when they decide to remortgage or take out a new product. On top of this, we are pleased to be applying more reductions to our rates.”
In addition to these changes, the Financial Conduct Authority (FCA) is currently reassessing its expectations for mortgage lending as part of ongoing proposals to streamline its rules. This initiative could further facilitate access to home loans for a broader segment of the population.
Nationwide’s recent rate cuts are not limited to new borrowers; they also extend to existing customers looking to switch products. The society is slashing up to 0.29 percentage points off its fixed-rate deals for both new and existing customers. The new remortgage rates start at 3.94 percent, with a £1,499 fee for new customers, while existing customers can opt for rates starting at the same percentage but with a reduced fee of £999.
Carlo Pileggi, Nationwide’s Senior Manager for Mortgages, stated, “After cutting rates for first-time buyers and home movers earlier this week, we are now reducing rates for existing customers looking for a new deal and new customers wanting to remortgage. The latest cuts ensure that we have competitive mortgage rates across the board and firmly position us as the go-to lender for every type of borrower.”
Industry experts have noted that these significant price reductions are a welcome development, especially as lenders have recently focused on lowering rates for property purchases rather than remortgages. Aaron Strutt, director at brokers Trinity Financial, commented, “Nationwide is making some pretty big price reductions to its remortgage deals, which is good to see because the lenders have been concentrating on lowering their property purchase rates.”
Strutt further observed that while the majority of existing mortgage borrowers nearing the end of their fixed rates may choose to stick with their current lenders, the attractive 3.94 percent remortgage rates could entice some to switch providers.
The impact of these changes in the mortgage market is expected to be substantial. With the combination of lower rates and revised stress testing criteria, many borrowers may find themselves in a better position to secure the financing they need. As the competition among lenders heats up, consumers stand to benefit from a wider array of options and potentially more favorable borrowing conditions.
Overall, the recent moves by Nationwide, HSBC UK, and First Direct highlight a shift in the mortgage landscape, offering hope to prospective buyers and existing homeowners alike. With the FCA's ongoing review and lenders actively adjusting their offerings, the coming months could see even more changes that may facilitate home ownership in the UK.
As the market evolves, borrowers are encouraged to stay informed about their options and consider how these changes might impact their home financing decisions. With mortgage rates fluctuating and lenders vying for business, it’s a pivotal time for anyone looking to buy or refinance a home in the UK.
