New cut for lender's mortgage rates

The Nationwide has announced mergers with two rivals

The UK's biggest building society has cut its mortgage rates for the second time in two weeks following a fall in the cost of wholesale funding.

Nationwide is reducing the cost of some of its fixed-rate and tracker deals by up to 0.46% from Friday.

But the group is also hiking rates by 0.1% for people taking out two and three-year tracker mortgages who have deposits of less than 10%.

The group said it was reducing the cost of its deals following a recent fall in swap rates, upon which fixed-rate mortgages are based.

A number of other major lenders have also slashed their rates during the past two weeks, including Abbey, Cheltenham & Gloucester and Barclays' lending arm the Woolwich.

The biggest reduction made by Nationwide is to its lifetime tracker deal, with rates on this mortgage being reduced by 0.46% to 5.98% for people paying a £599 arrangement fee and who have a 25% deposit.

Two-year fixed rate deals are being cut by 0.4%, to give a new rate of 6.18% for people remortgaging who are borrowing 75% of their home's value and pay a £599 fee.

But borrowers with a deposit of less than 10% will now have to pay 0.1% more for a two-year tracker, with the rate raised to 6.68%.