UK's Nationwide cuts mortgage rates

By Jennifer Hill, Personal Finance Correspondent

LONDON, May 13 (Reuters) - Nationwide, Britain's third largest mortgage lender, is cutting the price of some of its fixed rate home loans as it vies to lure in new customers.

The building society said it would reduce some two and five-year fixed rate deals by up to 0.30 percent from Friday.

Two-year fixes will fall to between 5.95 and 6.55 percent depending on the level of fees and whether the loan is for a house purchase or remortgage. Five year fixed rates will range from 5.85 to 5.95 percent.

Matthew Carter, Nationwide's divisional director for mortgages, said the reductions were possible due to falling swap rates, which lenders use to price their fixed-rate offerings.

Thousands of mortgage products have been withdrawn from the UK market in recent months. Lenders have scrapped cheap fixed-rate deals, introduced higher-rate products, cut the maximum amount people can borrow in relation to the value of the property and tightened their criteria as they aim to navigate liquidity problems and attract less risky customers.

In recent weeks, however, a string of lenders have lowered rates as they vie to boost competitiveness and increase market share in the face of the credit crisis that has seen the mortgage market shrink considerably.

Last week, Alliance & Leicester brought in lower rates for borrowers with deposits of 25 percent or more. Earlier, Abbey trimmed some fixed and flexible mortgage rates, while Royal Bank of Scotland cut up to 0.3 percent off new mortgages.

Read Reuters consumer finance blog here

(Editing by Stephen Addison)