Nationwide 'will encourage others' to cut home mortgage rates
An industry figure has said that the recent rate cuts on various mortgage products by Nationwide Building Society will see others following suit.
Phil Perry, director at advisory firm Ark Financial Planning, said that Nationwide has opened the floodgate for more mortgage lenders to cut their rates on fixed-rate and tracker deals.
The building society yesterday (August 4th) revealed that all of its two and three-year fixed-rate mortgages, along with similar term tracker packages, would see interest cuts of up to 0.5 per cent.
Mr Perry was "surprised" by the decision as he expected home mortgage rates to rise considering the Bank of England's base rate can only go upward from here on, which it could do following the Monetary Policy Committee's announcement this week.
But because Nationwide are a "market leader", the other big banks may begin to drop the interest on their fixed-rate mortgages and tracker loans as "they tend to all do it around the same time".
While this is one option, Mr Perry warns that it could be a ploy by Nationwide to drum up some custom before raising rates again.
He said: "That has happened in the past where they have actually cut rates in order to try and bring business in and what they then do [is] they go along and increase the rates again or increase the fees. It's very much swings and roundabouts."
Property investment consultancy Ducalian recently said that now is the best time "in a generation" to choose a fixed-rate mortgage.
The firm advised those thinking about taking out a mortgage on a house as an investment to do so now while the environment is a positive one.
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