First time buyers and prospective homeowners with small deposits are now beginning to see lower mortgage rates.

And the Bank of England will reduce its base rate to 3% from 5% within a year, according to a major bank.

Close to 5%

Nationwide and Clydesdale now both offer rates close to 5% for those buying a home with a 5% deposit, the Daily Telegraph reports.

Clydesdale is offering a 5.02% five-year fixed rate, while with Nationwide it is now 5.04% following a 0.25% cut by the lender.

TSB has cut its rate by up to 0.35%, NatWest by up to 0.19% and HSBC by 0.15%.

NatWest is offering a five-year fix at 3.77% for those with a 40% deposit, which is currently the best rate on the market.

We could see even more attractive mortgage deals.”

Nick Mendes of brokerage John Charcol (main picture), told the Telegraph: “As lenders respond to lower funding costs and increased competition, we could see even more attractive mortgage deals.

“This would not only provide financial relief to homeowners, but also encourage first-time buyers and motivate home movers, boosting both the housing market and the wider economy.”

The threshold for stamp duty for FTBs was pushed up to £425,000 in the 2022 Mini-Budget, but the limit will be reduced back down to £300,000 in April next year.

3% base rate

Meanwhile, American bank Goldman Sachs predicts the Bank of England will cut the base interest rate at every meeting from November onwards until it falls to 3% in September next year.

The Bank reduced its base interest rate by 0.25% from a 16-year high of 5.25% to 5%, last month. Members of the Bank’s Monetary Policy Committee voted narrowly for a cut by five votes to four.

Goldman Sachs said the Bank will follow other countries as they reduce their base rates in 2025.