Nationwide reduces mortgage rates for those with small deposits

14 October 2014

  • Competitive Save to Buy mortgage deals for two, three and five year fixed terms
  • Rates reduced by up to 0.70%, starting at 4.79% for those with a 5 per cent deposit

From Wednesday October 15, Nationwide is reducing mortgage rates for customers with small deposits using its Save to Buy scheme.

All of Nationwide’s 95 per cent loan to value (LTV) Save to Buy rates have been reduced by up to 0.70%. As a result, the Society is offering competitive rates against the leading products of other lenders using the Help to Buy mortgage guarantee scheme. Nationwide recently resumed lending for Help to Buy equity loan home movers, in addition to first time buyers, making the Society a leading lender for the Help to Buy equity loan scheme.

With Save to Buy, savings accounts can be opened with a minimum of £50, with customers saving at least £50 per month for six months or more. First time buyers and home movers will then be eligible to apply for a Nationwide fixed rate mortgage. If the customer goes on to take a Save to Buy mortgage, depending on how much they save, there is also a cashback reward of up to £1,000.

The new rates for the 95 per cent LTV deals are as follows:

  • Two year fixed rate is 4.79% with a £999 fee (with a reduced fee of £499 for first time buyers)
  • Three year fixed rate is 5.19% with a £999 fee for new borrowers (£499 for first time buyers)
  • Five year fixed rate is 5.39% with a £999 fee (£499 for first time buyers)

Existing mortgage customers benefit from an additional 0.10% discount on the new customer rates.

In addition to the Save to Buy changes, the 95 per cent LTV five year fixed rate deals for existing borrowers will be reduced by 0.50%, with a rate of 5.49% with a £999 fee, 5.69% with no fee.

Richard Napier, Nationwide’s Divisional Director of Mortgages and Savings, said: “With issues of affordability of increasing importance, we are aiming to help aspiring homebuyers with smaller deposits to have the means to secure a home of their own. With Nationwide’s established Save to Buy scheme, customers who have demonstrated a history of saving are being given the opportunity to access very competitive mortgage rates. This shows that good savings habits and strong credit quality go hand in hand.”

Also, as part of Nationwide’s ongoing Loyalty Rate Mortgages initiative, selected rates for existing mortgage customers will be reduced as follows:

Two year fixed rates

  • 85 per cent LTV 2 year fixed rate with a £0 fee reduced to 3.29%.

Two year tracker rates

  • 85 per cent LTV 2 year tracker rate with £999 fee, reduced to 2.69%.

Notes to Editors:

Save to Buy:

The savings element

Save to Buy is a regular savings account paying a competitive rate of 2 per cent gross p.a. /AER. Customers have the choice of two account options:

  • Save to Buy ISA – a tax-free cash ISA that allows deposits up to the annual cash ISA limit each tax year
  • Save to Buy – an account that allows unlimited deposits up to £20,000

The accounts can be opened with just £50 and customers have to save at least £50 per month for six months or more, with the flexibility of not paying the minimum monthly amount for up to three months during a rolling 12 month period. If the customer goes on to take a Save to Buy mortgage, there is also a cashback reward of up to £1,000 – and the more they save, the more cashback they receive.

Amount saved and cashback reward
Amount saved Cashback reward
£2,500 - £4,999 £250
£5,000 - £9,999 £500
£10,000+ £1,000

The mortgage element

First time buyers and home movers, saving for a minimum of six months, will be eligible to apply for a Nationwide fixed rate mortgage of between 85.01% and 95% LTV (two year fixed rates have a maximum LTV of 90%). The extension of the Save to Buy product to home movers means borrowers with a small amount of equity have the possibility of being able to move.

Loyalty Rate Mortgages:

  • Nationwide will compare like for like products against the comparable LTV tier and fee range of the Nationwide’s top six competitors. Based on CML gross lending figures, these are currently NatWest/ RBS, Halifax, Santander, HSBC, Barclays / Woolwich, Lloyds. These lenders are fixed for the year and will be reviewed in September 2015.
  • To qualify for the Loyalty Rate Mortgages initiative, mortgages have to be like for like, i.e. have the same product term and comparable arrangement/product/booking/application fee. Competitor products are those available to all customers through lenders’ retail channels and will exclude deals through subsidiaries, intermediary exclusives, Buy to Let mortgages, those linked to schemes, such as Help to Buy and those with fees greater than £1000.
  • If a competitor’s mortgage deal is lower than the Nationwide equivalent, that product will be re-priced on the following Wednesday to be lower by at least 0.01%. This process will be repeated each week.
  • The Loyalty Rate Mortgages initiative is ongoing, but can be withdrawn at any time.

Key features of Nationwide’s fixed and tracker mortgage product range for new applications

1. Flexibility:

  • Overpayments (maximum of 10% of the initial amount borrowed per annum where an ERC applies to the product. Where a product is not subject to an ERC, there is no maximum overpayment allowance).
  • Apply for a Further Advance, the additional borrowing facility.

2. Free Standard Valuation:

  • No standard valuation fees for homebuyers (on Flexclusive products only*) or for those who are remortgaging.

3. Free standard legal fees for house purchase (on Flexclusive products only*) cover the conveyancer’s professional charges relating to the house purchase only when using one of our panel legal firms. The customer will be liable for some additional fees relating to the disbursements, e.g. Land Registry fees and local authority searches. Due to Northern Irish law, Nationwide is unable to offer free legal fees for house purchases in Northern Ireland.

4. Cashback is payable one month after completion of the mortgage

5. Maximum LTV:

  • Lending above 85.01% is available on fixed rate mortgages.
  • 95% LTV mortgages are available to:
    • Existing Nationwide mortgage borrowers switching at the end of their current deal or moving home.
    • Save to Buy customers.
    • NewBuy customers.
  • 90% LTV mortgages are available to:
    • Existing Nationwide mortgage borrowers switching at the end of their current deal or moving home.
    • First-time buyers and home movers.
  • First-time buyers can access 95% LTV products through Save to Buy and NewBuy.
  • Maximum 75% LTV on new build flats and 85% LTV on new build houses (90.01% to 95% LTV for approved NewBuy housing providers).

6. Base Mortgage Rate

  • Any mortgage products reserved on or before 29 April 2009 will revert to the Base Mortgage Rate (BMR). If the borrower chooses to switch to a new Nationwide mortgage product, the new product will currently revert onto our Standard Mortgage Rate (SMR).
  • Both are variable rates which we may vary in accordance with our mortgage terms and conditions. However, the BMR is guaranteed to be no more than 2% above the Bank of England base rate, whilst the SMR has no upper limit or cap. If the borrower chooses to switch to a new product from a BMR, it is not possible to switch back to the BMR at a later date.
  • All mortgages reserved on or before 3 March 2010 include the option to apply for a payment holiday and borrow-back facility. Any mortgages reserved after this date will no longer include these facilities.
  • If the borrower is currently letting their property they will be unable to switch to a new mortgage deal and their mortgage will automatically revert to the Nationwide variable rate as stated in their mortgage offer.

7. Early repayment charges for fixed rate and tracker mortgages

Throughout the deal period, a percentage of the outstanding loan is payable as detailed below. Overpayments of up to 10% per annum are permitted without the need to pay an early repayment charge.

Percentage of the outstanding loan is payable
  Year 1 Year 2 Year 3 Year 4 Year 5
2 year fixed 2% 1%      
3 year fixed 3% 2% 1%    
4 year fixed 4% 3% 2% 1%  
5 year fixed 5% 4% 3% 2% 1%

*To get access to our range of Flexclusive offers customers must either:

1. hold a FlexAccount with a Visa debit card (not cash card or cash card+) and:

  • have been paying in £750+ a month (excluding internal transfers) for the last 3 months; or
  • complete an account switch to us (from a non-Nationwide account) using our Current Account Switch Team or have done so in the last 4 months; or

2. hold a FlexDirect or FlexPlus account.

About Nationwide Building Society

Nationwide is the world's largest building society as well as the second largest savings and mortgage provider in the UK. It is also a major provider of current accounts, credit cards, ISAs and personal loans. Nationwide has around 15 million customers.

Customers can manage their finances in a branch, via the mobile app, on the telephone, internet and post. The Society has around 17,000 employees. Nationwide's head office is in Swindon with administration centres based in Northampton, Bournemouth and Dunfermline. The Society also has a number of call centres across the UK.

Customers can manage their finances in branch, on the telephone, internet and post. The Society has around 17,000 employees. Nationwide's head office is in Swindon with administration centres based in Northampton, Bournemouth and Dunfermline. The Society also has a number of call centres across the UK.

Please note: If you are a customer looking for information on our products and services, please visit the main website.