First Direct cut its mortgage rates on Tuesday, following several other lenders in starting the new year with price reductions.
The bank is cutting rates by up to 0.3 percentage points across its mortgage range.
Its lowest rates will now be its five-year mortgage at 4.13 per cent for buyers with large deposits of 40 per cent, and 4.1 per cent for existing customers remortgaging.
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Read MoreIt follows several other providers that have repriced downwards in recent days.
HSBC cut rates on many of its mortgage products on Monday, while smaller lenders such as Gen H and Market Harborough Building Society also reduced prices.
Brokers said the cuts were good news and that further cuts were likely to come over the coming weeks.
Nick Mendes of John Charcol brokers said: “First Direct’s decision to reduce mortgage rates by up to 0.3 percentage points across its repayment mortgage range is a welcome move for borrowers.
“It reflects the competitive nature of the market and offers potential savings for first-time buyers, home movers, and those looking to remortgage.
“It’s been a positive start to the new year, with competition slowly increasing among mainstream lenders. The rate cuts, such as those from First Direct, highlights that lenders are keen to attract borrowers, but the scope for reductions remains limited.
“While we’re likely to see further rate cuts over the coming weeks, these are expected to be modest, with only minimal changes to the best deals currently available.”
Aaron Strutt, of Trinity Financial added: “We may well see more pricing improvements over the coming days based on the changes we’ve seen so far this year.”
Lenders begun cutting rates at the end of last year after weeks of increases.
Mortgage rates started to climb after the Budget following an increase to swap rates, which are based on expectations for where the Bank of England base rate will go in the future.
Economists said October’s Budget was likely to mean a higher peak for inflation, and this meant that markets began to predict that the Bank of England would cut interest rates from its current level of 4.75 per cent more slowly than previously predicted.
Swap rates rose based on these predictions, and these tend to have a large impact on fixed mortgage pricing.
But as swap rates have eased, some lenders have begun to cut rates.
Even though rates have started dropping, they are still higher than they were at their lowest point in 2024, when deals below 4 per cent were available.
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