Nationwide Building Society to slash mortgage rates by 0.25% | Personal Finance | Finance

Nationwide Building Society will cut interest rates for variable mortgage rate customers by 0.25% next month. The decision comes after the Bank of England cut the Base Rate to 4% on Thursday, marking the lowest rate in two years.

Nationwide customers on the Standard Mortgage Rate (SMR) will see interest drop to 6.74%, taking effect on September 1, 2025. The mutual’s Base Mortgage Rate will be reduced from 6.25% to 6%. Nationwide’s tracker mortgage rates will also drop in line with the Base Rate.

Customers will receive written confirmation of their new monthly payment over the coming weeks. Nationwide said: “You’ll start paying the new amount from September 2025, on your usual payment date.”

If you’re a Nationwide customer and you’re unsure what mortgage deal you’re on, you can use the mutual’s Mortgage Manager tool to find out. You can also use it to switch to a new deal, or make other changes such as organising overpayments, extending or reducing your mortgage term.

The mutual joins a number of other lenders responding to the Bank of England’s rate cut, including Coventry Building Society, which recently announced plans to slash mortgage interest rates “across the board” as early as Tuesday.

Coventry Building Society’s residential rates will reduce by up to 0.14%, and two, three, and five-year fixed rates are available.

From August 12, the lender will introduce a 3.8% two-year fixed rate at 65% loan-to-value (LTV) with a £999 fee, available for residential purchases.

In addition, a 4.76% two-year fixed rate to February 29, 2028, will be offered at 90% LTV, with no fee and £500 cashback, aimed at first-time buyers.

Jonathan Stinton, head of mortgage relations at Coventry Building Society, said: “Rates coming down is great news for borrowers, because it means cheaper options are available.

“Whether people are looking to buy their first home or lock in a new deal, a lower rate can make a real difference to the monthly repayments. This can really help people feel confident about their next move.”

The Bank of England’s Monetary Policy Committee voted to cut the Base Rate from 4.25% to 4% on Thursday, August 7, in a narrow 5-4 split.

The Bank of England now expects UK inflation to hit 4% in September – twice its official target and slightly above the 3.8% forecast it made in May. The figures, published in its latest Monetary Policy Report, come despite fragile economic growth and mounting concerns over the job market.

Traditionally, higher-than-target inflation would steer policymakers away from cutting rates. But faced with a sluggish economy, the Bank opted to reduce borrowing costs.

Governor Andrew Bailey called the move “finely balanced,” noting: “Interest rates are still on a downward path. But any future rate cuts will need to be made gradually and carefully.”

Peter Stimson, director of mortgages at the lender MPowered Mortgages, said. “Sometimes it’s not the cut that counts, but the voting.

“Whilst the Committee’s doves have won the day with a view that the increasingly gloomy economic outlook, with slowing growth and employment, warrants a cut, the narrowness of their victory will set many thinking that the next rate cut may be some time off.

“The swaps market – which largely determines fixed mortgage rates – had priced in today’s cut and indeed future rate cuts, and may well see, based on the voting pattern and minutes, a continued cautious, slow and steady approach to rate reductions in the months ahead.”

He added: “On this basis, borrowers are unlikely to see any material changes to their mortgage rates in the immediate term, simply as it is already priced into the swap curves. The only thing that is really going to drive any material change is a significant fall in the Consumer Price Index, allowing the hawks at the bank to agree that the beast of inflation has finally been tamed. For this, we eagerly await the inflation numbers in the weeks ahead.”