Nationwide cutting mortgage rates by up to 1 per cent

The society will also reduce its product fee by £500 for those who are moving home – effectively a 50% reduction. This coincides with the launch of Save to Buy, a new scheme for first-time buyers which offers incentives to save mortgages with small deposits.

From Friday 6 May 2011, Nationwide will be reducing mortgage rates on its 3 and 5-year fixed rate deals for new and existing customers moving home and new customers buying their first house with a small deposit.

Rates at 90% LTV will be reduced by 1% and rates at 95% LTV will be cut by 0.50%. The new rates start from 5.79% with a 10% deposit and 6.29% with a 5% deposit on the three-year fixed rate deals.

Nationwide is also helping to remove another barrier for buyers by offering first-time buyers, home movers and existing customers moving home a £500 product fee discount across all products that normally carry a £999 fee.

While the rehabilitation of the housing market is underway, the lack of high LTVs and harsh lending criteria are preventing the spectacular recovery which many are hoping for.

Martyn Dyson, Nationwide’s head of mortgages, said: “These changes have been designed for people who want to move or buy their first house but find they’re struggling with raising a large enough deposit or affording the upfront fees.

“We’re tackling these issues head on by not only making our mortgages available to first-time buyers with just a 5% deposit through Save to Buy but by reducing our rates at higher LTVs. We hope this will give prospective buyers the boost they need to make their move.”

Nick Leeming, business development director of Zoopla, added: “The lowest end of the property market is in a state of rigor mortis because of the lack of affordable mortgages, and until this section of the market springs back into life prices will remain deflated all the way up the property chain.

“The demand to buy is there – over a million first time buyers are trying to piece together deposits to meet stringent lending criteria – but lenders need to seriously address the lack of higher LTV products available to them.”

Nationwide will also be offering its borrowers a 15% discount off of Pickfords key services and 10% of Big Yellow Self Storage Company.