This week, Nationwide launched a mortgage with interest rate that’s fixed at 0.99% for five years.
The building society has dropped interest rates on its mortgages by up to 0.4% across the board so this is not strictly speaking a new product, just a lower rate on an existing one.
But it is a new low as so far all of the sub-1% mortgages, including Nationwide’s own version, have been for shorter fixed terms of one or two years.
Typically, shorter fixed term mortgages have lower interest rates than longer ones as they operate as a bit of a loss leader.
Lenders expect to make less money during this introductory period so that when you move onto their follow-on rate or the standard variable rate (SVR), which is always higher, they can make more profit if you don’t switch to another provider.
But a five year fixed term mortgage is actually a pretty good stretch of time – possibly even worth paying a penalty to switch for.
It’s available to home movers and those remortgaging only though, and at 60% LTV, you’d need at least 40% of equity in your home.
It also comes with a pretty hefty £1,499 fee – you can tag this onto your mortgage but just bear in mind the overall cost if you’re switching.