Nationwide steps up battle with rivals by cutting fixed-rate mortgages

Nationwide, the UK's largest building society, stepped up the mortgage battle with its stock market rivals by cutting three of its fixed- rate mortgages. The building society also reaffirmed its pledge to hold variable rates unchanged unless the Bank of England increased base rates again. Together, these moves will benefit more than 1 million homeowners.

Nationwide has reduced two, three and five-year fixed-rate mortgages by 0.4 per cent, a move made possible by recent falls in long-term interest rates.

The two-year fixed rate at Nationwide is now 5.49 per cent. The three- year fixed rate is 6.19 per cent and the five-year rate is 6.69 per cent.

Bradford & Bingley's 343,000 borrowers were less fortunate, as the building society ended a four-month mortgage freeze with a 0.5 per cent increase in its variable rates.

From 1 February, Bradford & Bingley's variable rate for "loyal" borrowers will be 8.25 per cent. The rate for other borrowers - customers of less than two years' standing - will be 8.45 per cent.