Nationwide to cut mortgage rates

Mortgage availability is still expected to be squeezed in coming months

The Nationwide is to cut the cost of mortgages for new borrowers for the second time in as many weeks.

The building society says rates will come down by up to 0.46% on some of its fixed-rate and tracker home loans from 18 July.

But those unable to provide more than a 10% deposit when buying will see a smaller fall in rates.

Mortgage rates have fluctuated during the credit crunch, owing to the cost of wholesale borrowing for lenders.

Swap rates - the key to mortgage rates - have been stubbornly high until recent weeks, when they started to fall.

The Nationwide is cutting interest on a two-year fixed-rate deal, for those paying a £599 fee, from 6.48% to 6.18% on a loan that is 75% of a property's value. It is coming down from 6.88% to 6.58% for those who need a 90% loan-to-value mortgage.

Drew Wotherspoon, of mortgage brokers John Charcol, said the news would be a huge relief to borrowers.

"With one of the country's leading lenders taking this welcome step, this should be a sign of things to come," she said.

But lenders still expect the availability of mortgages to remain tight during the coming months, because of the effects of the credit crunch.

On 9 July, Nationwide trimmed its fixed-rate and tracker deals for house buyers, some three weeks after it raised mortgage rates by up to 0.5%.