Nationwide Building Society has chopped its mortgage rates for borrowers with just a 5% deposit.

Selected fixed and tracker mortgage rates at 95% loan to value (LTV) are being reduced by up to 0.50%, to help both first-time buyers and those buyers in areas where house prices are high.

Sub-3% deal

The mutual is launching a sub-3% rate for those with a 5% deposit. The 2.99% two-year tracker comes with a £999 fee or there is a 3.39% option with no fee.

Three- and five-year fixed rates at 95% of the property’s value have also been reduced, with the three-year fixed product starting at 3.59% with a £999 fee and 3.89% with no fee, while the five-year fixed is 3.74% with a £999 fee and 3.94% with no fee.

The maximum loan size on these deals will be increased from £350,000 to £500,000 for all house purchase transactions.

Henry Jordan, Nationwide’s director of mortgages, said: “We know that finding a deposit can be a challenge for those looking to take their first steps towards home ownership.

“The changes announced today offer competitive rates for those with small deposits, along with the added flexibility of being able to borrow up to £500,000, and are aimed at particularly supporting first time buyers, as well as those living in areas with higher property values.”