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Defaqto on Nationwide Two-Year Fixed

View of Defaqto insight analyst for banking Kevin Bray

Bray says: “It is difficult to compare Nationwide’s new product as its nearest competitors offer rates with higher LTVs, but the combination of low rate and a fee of £400 for purchase or £900 for re-mortgage is an attractive proposition.

“With the inevitable rise in interest rates getting closer a two year fixed rate at less than 3 per cent may be appealing to customers who wish to have certainty of their monthly payment.

“The product is only available on a repayment basis, allows a maximum of £500 overpayments per month without penalty and will revert to Nationwide’s higher standard mortgage rate which is currently 3.99 per cent.  A £99 non-refundable booking fee is payable which must be paid up front but the product fee can be added to the mortgage upon completion.

“Fixed rate pricing for two-year fixed rate mortgages is at its lowest level for 2 years for loans up to 60 per cent LTV, with the average rate now just 3.61 per cent. In June 2010 the average rate was 3.98 per cent while in June 2009 the average was higher still at 4.33 per cent It is unlikely that 2 year fixed rate mortgages will be priced lower in the immediate future and should the decision to raise interest rates come sooner many borrowers may have missed the opportunity to secure the best priced deals.”

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