Nationwide set to cut fixed mortgage rates to as low as 3.50% from Thursday

Nationwide Building Society is chopping its fixed mortgage rates to as low as 3.50% from Thursday as competition in the market continues to heat up.

Britain’s biggest building society will offer a two-year fixed rate mortgage at 3.50% to existing and new customers looking to move home. Homeowners will need to have a 40% deposit to get the deal, which also has a £1,499 fee.

The 3.50% rate being offered from Thursday has been reduced by 0.08 percentage points, with Nationwide cutting rates by up to 0.20 percentage points across two, three and five-year fixed-rate products for new and existing customers – and by up to 0.17 percentage points for first-time buyers.

Mortgage deals set to be offered under the revamp from Thursday also include a two-year fixed-rate mortgage at 3.75% for first-time buyers. That rate has been reduced by 0.17 percentage points. A 15% deposit is needed for the deal, which has a £999 fee.

First-time buyers also receive £500 cashback when they complete their mortgage with Nationwide.

Carlo Pileggi, Nationwide’s head of mortgage products, said: “Rates starting at 3.50% for new and existing home movers will come as great news to those looking to move home in 2026.”

Nicholas Mendes, mortgage technical manager at John Charcol, said Nationwide’s latest reductions “feel like a real line-in-the-sand moment”.

He said the 3.50% rate “will turn heads”, adding that it is encouraging to see another major lender following “the sharper pricing” recently seen from Lloyds for Club Lloyds current account holders.

He said: “Competition is clearly building pace. HSBC has also been trimming pricing across parts of its home mover and first-time buyer ranges.”

Mr Mendes added: “Any further falls from here are more likely to be marginal than dramatic. In most cases, it is better to secure something now, then switch down if pricing improves before completion, than to try to time the bottom.

“A good broker can help manage that process, keep the case moving, and make sure you can benefit from any further rate reductions that appear before you complete.”

Rachel Springall, a finance expert at Moneyfactscompare.co.uk, said: “It is fantastic news for borrowers to see further reductions to mortgage rates, with Nationwide now offering one of the lowest fixed rate deals across the entire mortgage market at 3.50% for two years.

“The start of 2026 has been very positive for borrowers, swap rates are currently resting near 30-day lows, which gives borrowers hope for further rate cuts to come in the weeks ahead.

“Now is an ideal time for borrowers to seek advice to assess the latest deals to hit the market, particularly as there have been several lenders cutting fixed rate deals since the start of January.

“It is worth noting that the lowest rate deals might not always be the best option, so it is important borrowers weigh up any upfront fees and cost-saving incentives before they apply.”

Ms Springall said expectations are high for a “booming market” in 2026.

She said: “Mortgage rates are lower year-on-year, and the choice of deals is abundant. The relaxation in stress testing and expectations for further rate cuts will help ease the affordability constraints on borrowers.

“First-time buyers are not being left behind by this progress, as deals aimed at those with a low deposit now stand at their highest levels for almost 18 years, yet more progress to support underserved buyers would be welcomed amid a lack of affordable housing.

“Innovation is set to become a key talking point this year.”