The war among mortgage lenders to attract new clients is driving down loan rates and higher property prices as more banks enter the market. with deals lower than 1 percent.
The stalwart Nationwide High Street member has become last lender to cut rates after it launched the lowest mortgage deal for new clients yesterday.
The largest construction company in the UK said it will offer new borrowers who have a deposit of 40 percent a rate of 0.87 percent.
The move came after the UK housing market saw an unexpected upturn in August, with the average property price rising nearly £ 5,000 to £ 248,857 in one month.
Mark Harris, executive director of mortgage broker SPF Private Clients, said: “Property prices are soaring due to stock shortages and low borrowing rates give borrowers confidence that they can get their hands on the property of their dreams in the race to space.”
Along with the drop in Nationwide interest rates, Barclays also cut the cost of some of its borrowing rates, including cutting the rate on its two-year mortgage to 0.85%. As with Nationwide, borrowers will need a 40 percent deposit.
Henry Jordan, Director of Mortgages at Nationwide, said: “As one of the largest lenders in the UK, we are constantly reviewing our rates to ensure we remain competitive in the market.”
A number of large lenders have already announced deals at less than one percent, with HSBC slashing rates to 0.99 percent on its two-year fixed product for those with 40 percent deposits or equity.
The platform, the lending arm of the Cooperative Bank, cut the rate on its 40 percent deposit product to 0.95 percent.
Lewis Shaw, founder of Shaw Financial Services, said: “The mortgage rate wars have become almost Spartan as lenders compete for market share for quality, low-risk borrowers.
“Mortgage lenders are elbowing and pushing each other to attract the highest quality clients, and they use absurdly low rates to catch their victim.”