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First Direct cut the mortgage rates it offers by up to 0.17 percentage points on Tuesday, following a wave of rate cuts from major lenders last week.
The bank has cut interest rates on two-, three- and five-year fixed-payment mortgages aimed at first-time home buyers and those relocating.
The cuts also include a reduction in two-year fixed-rate contracts for those with a 15% down payment, reducing the current interest rate from 5.16% to 4.99%.
Liam O'Hara, head of mortgages at First Direct, said: “We're pleased to be able to reduce interest rates on our two, three and five year fixed mortgages across the entire range of LTV (loan-to-value ratios) from 60% to 95%.”
“We are seeing the highest demand for these products and today's changes will help people take their first step toward homebuying or moving into their next home.”
Economists expect the Bank of England's base rate to be cut from its current 16-year high of 5.25% when it next votes on August 1, and there are already signs that lenders are seeing mortgage rates gradually fall.
First Direct cut mortgage rates by up to 0.17 percentage points on Tuesday (Gareth Fuller/PA) (PA archive)
Halifax, HSBC UK, Barclays, Santander, NatWest and Yorkshire Building Society all made changes to their rate ranges last week, with some lenders having cut mortgage rates multiple times in the past few weeks.
Ben Merritt, head of mortgages at Yorkshire Bank, said last week that market conditions had allowed the bank to cut interest rates on several of its products.
Some commentators have suggested that the need to generate more business and spur summer sales may be incentivizing lenders to adjust rates.
There have also been some signs recently that mortgage product selection is improving.
Financial information website MoneyFact said this week that there were 361 mortgage products available with a 5% down payment as of early July, the highest number since May 2022.
People looking for properties with low down payments are often first-time home buyers.
Meanwhile, the availability of mortgage deals with a 5% down payment reached its highest level in more than two years in early July, according to the analysis.
Financial information website MoneyFact counted 361 such transactions, the most since May 2022, when 369 products were sold to people with a 5% down payment.
People looking for properties with low down payments are often first-time home buyers.