Major lenders cut mortgage rates

Three major lenders cut their mortgage rates today in a further sign that competition is creeping back into the market.

The Woolwich, Northern Rock and Abbey all slashed rates on a number of their mortgage deals, while HSBC announced it was extending the period for which its 1.99 per cent discount offer will be available until the end of October.

Barclay's lending arm the Woolwich reduced its lifetime tracker for people with at least a 30 per cent deposit by 0.45 per cent to 2.79 per cent, putting it at the top of the best buy tables.

The group, which is keen to expand its share of the mortgage market, also launched a fee-free lifetime tracker at 3.19 per cent for people borrowing 75 per cent of their home's value.

But within hours, nationalised bank Northern Rock announced it was cutting the rate on its two-year tracker by 0.2 per cent to 2.79 per cent.

The deal is also for people with a 30 per cent deposit, but has a lower fee than the Woolwich's lifetime mortgage of £595.

The group also reduced its fixed rate mortgages by up to 0.3 per cent, leaving a two-year fixed rate deal for people buying a home with a 30 per cent deposit at 3.75 per cent, while its buy-to-let rates have been cut by up to 0.6 per cent.

In addition, product fees on its residential mortgages have been reduced by £400 to £595.

Meanwhile, Abbey cut its fixed rate deals by 0.11 per cent, leaving a two-year fixed rate mortgage at 3.88 per cent for buyers borrowing 70 per cent of their home's value and paying a £995 fee.

It also launched a two-year tracker with a rate of 2.94 per cent for all borrowers with a 30 per cent deposit who pay a £995 fee. All the deals are also available through Alliance & Leicester branches.

Ray Boulger, senior technical manager at John Charcol, said: "We are beginning to see a little bit of competition coming back into the market, but that's not to say we are going to get back to the stage where they are competing for higher loan to value business."

Darren Cook, a spokesman for Moneyfacts.com, said: "It's good to see that big players have decided to take some action.

"But we would need to see more than a dozen lenders doing the same thing before we could really say competition was returning to the market."