Nationwide has announced another wave of interest rate cuts across its line of business products.

The building society will be reducing its fixed-rate deals by up to 0.26 percentage points.

The new rates will be effective from tomorrow and will include the cheapest five-year fixed rate deal on the market. It will offer home movers buying with at least a 40 per cent deposit a rate of 3.78 per cent. 

On a £200,000 mortgage being repaid over 25 years, that would leave someone paying £1,032 a month, as per ThisisMoney.co.uk

The product comes with a hefty £1,499 fee, which needs to be factored in even though the next best rate is substantially higher at 3.84 per cent, offered by HSBC. 

Nationwide is also offering a £999 fee option on the same terms with a rate of 3.83 per cent. For home movers buying with a 25 per cent deposit, it is offering a 4.09 per cent five-year fix with no fee.

Tony Castle, managing director at broker PFG Mortgages told the news agency Newspage: "It's incredible to see rates at 3.78 per cent. Many thought we may not see this until 2025, but they have been proven wrong. This is a huge boost for homeowners and home movers alike. 

"These rate reductions are sprinkling some serious stardust onto the housing market."

Andrew Montlake, managing director at broker Coreco also expects that current rates will fuel the housing market.

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He said: "Products such as these will help convince prospective borrowers who have sat on their hands for a while to plunge into the housing market before it becomes too hot and prices inevitably begin to strengthen once more, especially in high-demand areas."

Mark Harris, chief executive of mortgage broker SPF Private Clients said: "A sub-4 per cent five-year fix is great news for those coming up to remortgage. 

"Competition among the big six lenders is driving rates lower and borrowers are seeing the benefit."

Bank of England cut interest rates for the first time

On 1 August, the Bank of England cut interest rates for the first time in more than four years, leading many across the property industry to speculate that mortgage rates are now firmly on a downward trajectory.