Online bank First Direct has announced significant mortgage rate reductions of up to 0.30 percentage points. These reductions apply across its entire range of two, three, and five-year fixed-rate mortgages, with three new products priced at 3.89 percent.

Interest rate cuts have been applied to over 100 products, with most mortgages now priced under five percent.

The 3.89 percent rate is available on the 60 percent Loan to Value (LTV) five-year fixed standard mortgage, now offered to first-time buyers, home movers, and existing customers looking to switch.

For two-year fixed mortgages, rates start at 4.29 percent on the 60 percent LTV five-year fixed standard, with a three-year fixed option starting at 4.19 percent.

The largest rate cut is on the three-year fixed standard mortgage, now offered at 4.19 percent, down from 4.49 percent, and available to first-time buyers, home movers, and existing customers.

In the five-year fixed range, the biggest rate reduction was 0.23 percentage points. All products up to 75 percent LTV for first-time buyers, switchers, and home movers were reduced by at least 0.2 percent.

In the remortgage category, rates dropped by up to 0.20 percentage points. The Two-Year Fixed Standard is now available at 4.59 percent, and the Two-Year Fixed Fee Saver at 4.79 percent.

Liam O’Hara, head of mortgages at first direct said: “We are really pleased to be reintroducing sub-four percent rates, the first time we have been able to do so since January, as we cut rates across more than 100 products today.

“A range of factors impact our pricing decisions, but we are absolutely committed to supporting our customers by reducing the cost of borrowing when we can, whether they’re making their first steps onto the ladder, moving house or remortgaging.

“We have focused our rate reductions on our two to five-year-fixed rate range as we continue to see the highest demand for those products, and we’ve reduced rates across a broad range of LTVs to support a broad range of customers with different needs.”

A number of mortgage lenders have been reducing interest rates on deals following the Bank of England’s decision to cut the Base Rate last week.

Barclays and HSBC are both now offering sub-four percent interest rates on certain deals in a move that brokers described as a “real statement” to the market.

Stephen Perkins, managing director at Yellow Brick Mortgages commented: "It's game on in the mortgage market now. More lenders going sub-four percent is greatly welcomed. The hope now is that these competitive rates will filter up the loan-to-value brackets to help more borrowers."