Nationwide cuts mortgage rate

Nationwide hopes to pick up more of the house buying market

The UK's fourth largest mortgage lender, the Nationwide, has cut its mortgage rate.

The 0.2% cut to 7.09% in its variable mortgage rate was a further sign of the growing belief that interest rates have peaked.

The building society said its mortgages would be about 0.65% cheaper than competitors such as the Halifax, Abbey National and Lloyds TSB.

The building society said the cut came because of growing expectations that interest rates, which have been 6% since February, had peaked.

Brian Davis, Nationwide's chief executive, said: "With new lenders entering the fray and existing players fighting for share, the mortgage market place has become increasingly competitive.

"By taking the lead in cutting rates we are underlining our commitment to retaining a very strong position in this market place."

However, the Nationwide's rate is still above that of HSBC, which in July cut its standard variable rate to 6.75%.