UK mortgage rates: First Direct cuts mortgage rates for first-time buyers amid industry-wide reductions

• First Direct has lowered mortgage rates, following similar moves by other major lenders
• Its reductions apply to two, three and five-year fixed repayment mortgages, benefiting first-time buyers
• Cuts include a two-year fixed-rate deal for borrowers with a 15% deposit, dropping from 5.16% to 4.99%
• Economists predict a potential reduction in the Bank of England base rate from its current 16-year high of 5.25%
• Lenders such as Halifax, HSBC UK, Barclays, and others have also adjusted their mortgage rates recently to attract more business

First Direct has reduced its mortgage rates, lowering them by up to 0.17 percentage points following recent rate cuts by other major lenders last week.

The bank has decreased rates across its range of two, three and five-year fixed repayment mortgages available to first-time buyers and home movers.

Among the reductions is a cut on a two-year fixed-rate deal for borrowers with a 15% deposit. This rate is now set at 4.99%, down from 5.16%.

Liam O’Hara, head of mortgages at First Direct said: “We’re pleased to be reducing our rates across our range of two, three and five-year fixed mortgages, across LTVs (loans to value) from 60% to 95%.

“We see the highest demand for those products and today’s changes will help people making their first steps on the ladder, or those moving into their next home.”

Economists anticipate that the Bank of England base rate, currently at a 16-year high of 5.25%, will be reduced at the next vote on 1 August. There are already indications of mortgage rates from lenders beginning to decrease.

Last week, Halifax, HSBC UK, Barclays, Santander, NatWest and Yorkshire Building Society were among those to shake up their ranges, with some lenders cutting their mortgage rates more than once over the past couple of weeks.

Ben Merritt, the Yorkshire Building Society’s director of mortgages, said last week that market conditions had allowed it to reduce rates on several products across its range.

Some commentators have also suggested that the need to generate more business and ramp up their summer sales may be motivating lenders to tweak their rates. There have also been some recent signs that the choice of mortgage products is improving.

Financial information website Moneyfacts said this week that it had counted 361 mortgage products available for people with 5% deposits at the start of July, marking the highest total since May 2022.

People looking for low deposit deals are often first-time buyers. Moneyfacts looked at data for the first available day of each month for the research.

We'd love to hear your thoughts on how these mortgage rate reductions could impact your plans to buy a home or refinance. Are you considering taking advantage of these lower rates? Share your thoughts in the comments section.