Rebekah Downes/PA

Mortgage lenders are tightening up. Recent rate hikes and lending restrictions means loans are being pulled further out of reach for first-time buyers, as well as those moving or remortgaging.

Yet one lender is bucking the trend. Today Nationwide announced it is cutting some its mortgage rates and fees. So is there any chance other lenders may follow suit?

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Today Nationwide announced that it has cut the cost of some deals for the second time this month, this time on all its two- and five-year fixed rates by 0.10%. It has also cut its fees and its best deal is now a five-year fix at 3.89% up to 70% LTV with a £550 fee.

Yet with the warning from the Bank of England this week that the worsening eurozone crisis could mean that UK households will suffer higher interest rates, it is unlikely that many lenders will follow Nationwide's lead.

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"Problems in the Eurozone are likely to have a significant impact on the pricing of mortgages in the UK," said Mark Harris, chief executive of mortgage broker SPF Private Clients. "With the cross-border nature of banking, many UK banks will have significant exposure to the Eurozone and any losses here will mean even less money available to lend, which will push up the cost of borrowing."

"While Nationwide has cut some of its mortgage rates, it is likely to be in the minority because it is less dependent on the wholesale markets and less exposed in the Eurozone than some of its competitors."

Tough action
Indeed many mortgage providers have already tightened their belts and restricted the flexibility of their products. Some lenders have restricted the criteria for porting - when you move home and transfer your old mortgage interest rate to your new property – by reducing the window in which borrowers can transfer their mortgage.

This change is hitting many homeowners, who due to the sluggish housing market, are forced to move into short-term rental accommodation while they wait for property purchases to complete.

Rate hikes
Meanwhile, mortgage rates have been steadily rising over a number of months with some lenders pulling their best-buy deals from the market. "A number of lenders such as ING Direct, Halifax and Yorkshire Building Society have raised some mortgage rates over the past week and others are expected to follow, so if you are considering remortgaging, it may be worth doing so sooner rather than later," adds Harris.

"There are still some very competitively priced fixes available, particularly if you have significant equity in your home. But those who delay making a decision in the hope that mortgage rates will fall further in the short term at least are likely to be disappointed."

Good time to borrow
Yet some in the industry believe that the outlook isn't so bleak and that BOE Governor Mervin King is being needlessly alarmist. "The Bank of England warning is scaremongering in my opinion," said Hugh Wade-Jones, Director of Enness Private Clients. "Granted credit is harder to come by nowadays, but as long as you have a clean credit record and can prove your income, money has never been cheaper to borrow.

"People have got too used to borrowing whatever they want based on a good credit score and now common sense lending is finally prevailing. The Bank Base Rate is at a historic low and will be so for the foreseeable future, so there has never been a better time to take out a mortgage."

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