First Direct has slashed mortgage rates for first-time buyers and those looking to move, joining a wave of lenders offering cheaper deals.

In a move that could signal the start of a mortgage price war, First Direct has cut rates on its two, three, and five-year fixed-rate mortgages. This comes after several major lenders, including Halifax, HSBC UK, Barclays, Santander, NatWest, and Yorkshire Building Society, also lowered their rates in recent weeks.

For first-time buyers struggling to get on the property ladder, the news is particularly welcome. First Direct’s two-year fixed-rate deal for those with a 15% deposit now sits at a much more affordable 4.99%, down from 5.16%.

Why are rates falling?

Experts believe the Bank of England is likely to reduce the base rate from its current 16-year high of 5.25% on August 1st. Lenders are already anticipating this move and adjusting their mortgage rates accordingly.

Liam O’Hara, head of mortgages at First Direct, said the bank is responding to the high demand for these products: “Today’s changes will help people making their first steps on the ladder, or those moving into their next home.”

More choice for buyers

The rate cuts aren’t the only good news for prospective homeowners. The number of mortgage products available is also on the rise. Moneyfacts, a financial information website, reported a significant jump in the number of low-deposit mortgages, particularly those requiring only a 5% deposit – a popular choice for first-time buyers.

At the beginning of July, there were 361 such deals available, the highest number since May 2022, indicating a return to pre-pandemic levels of choice.

What does this mean for you?

If you’re considering buying a home, now could be a good time to explore your options. With lenders competing for business and the possibility of further rate cuts on the horizon, you might just find yourself with a mortgage deal that works for you.