First Direct reduced the mortgage rates it is offering by up to 0.17 percentage points on Tuesday, following a slew of rate cuts by major lenders last week.
The bank has cut rates across its range of two, three and five-year fixed repayment mortgages, for first-time buyers and home movers.
The reductions include a cut on a two-year fixed-rate deal for people with a 15% deposit, which is now priced 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 have predicted that the Bank of England base rate will be reduced from the current 16-year high of 5.25% at the next vote on August 1 – and there have already been signs of lenders’ mortgage rates edging down.
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’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.