Halifax is cutting some of its interest rates for new borrowers for the third time this month. The UK's biggest mortgage lender is shaving up to 0.3 percentage points off 16 of its home loan products tomorrow. Bank of Scotland (BoS), its sister company, is cutting rates on 29 products with reductions of up to 0.45 points.

Northern Rock, the troubled mortgage lender, has also announced a number of rate cuts which will take effect on Monday.

The reduction in rates will be welcomed by homeowners who are due to remortgage after months of rising borrowing costs implemented by mortgage providers who have been keen to pass on the higher cost of lending between banks.

Halifax's latest cuts are the third this month and the ninth since the start of the year. A spokesman for Halifax and BoS said they were a response to the recent spate of rate reductions by other lenders.

Most of the changes are to its tracker rates and three and five-year fixed rates, which are being cut by up to 0.18 points. Most of its two-year fixed rates were altered last weekend and will remain unchanged. However, Halifax is cutting the rate on its two-year fix for loans of over £500,000 by 0.3 points.

The BoS reductions are concentrated entirely on its large loans. Its two-year fix for customers borrowing more than £500,000 comes down by 0.45 points to 6.64 per cent.

At Northern Rock, the cheapest two-year fixes will come down by 0.15 points to 6.24 per cent for purchases and 6.34 per cent for remortgages.

In a move to ease some of the pressure for hard-pressed homebuyers the maximum permitted loan to value (LTV) on these deals will rise from 70 per cent to 75 per cent. The deals include a free valuation and no legal costs for remortgages and are available for amounts up to £1 million, rather than the more common maximum of £500,000 which many other lenders place on their headline rates.

Ray Boulger, senior technical manager at John Charcol, the mortgage broker, said: “All these factors make these two-year fixes very competitive.”

However he added that Northern Rock was also raising rates on its five-year fixed rates by between 0.2 and 0.4 points, pushing the cheapest rate up to 6.59 per cent.

Darren Cook of Moneyfacts, the financial research group, said: “The announcements by Halifax and Northern Rock are good news for homebuyers. Swap rates in the money markets, which determine the price of fixed rate loans, have been coming down in recent weeks and it is good that lenders are now passing on these lower rates. The average rate on a two-year fixed deal was 7.08 per cent two weeks ago but has now dipped below the key 7 per cent level and now stands at 6.98 per cent.

“For some time Northern Rock had priced itself out of the market but is now becoming steadily more competitive and this offers more choice for borrowers.”

Other mortgage lenders to announce cuts today include RBS Group, Stroud & Swindon Building Society and Scottish Widows Bank. RBS has today cut rates on some of its fixed rate residential home loans by up to 0.3 points. The rates on its First Active remortgage deals have been reduced by up to 0.35 points while it has cut rates on some of its NatWest buy-to-let loans by 0.2 points.

Stroud & Swindon has lopped 0.39 points off its three-year fixed rate residential mortgage, while it has cut the rate on its two-year fixed buy-to-let deal by a hefty 0.95 points.

From Monday Scottish Widows Bank is reducing rates on its two, three and five-year fixed deals by between 0.3 and 0.5 points.

Meanwhile Newcastle Building Society has today launched three new fixed rate products, all of which will figure in the best buy tables. It is offering a three-year fix at 6.05 per cent and five and ten-year fixes at 5.95 per cent. In each case the maximum LTV is 75 per cent and the fees range from £1,098 to £1,498.

Mr Boulger added: "The situation in the UK contrasts sharply with what is happening in the U.S., where mortgage rates are going up. This partly reflects concerns in financial markets about the troubles at Fannie Mae and Freddie Mac, the companies that guarantee about half of all US mortgages, and partly on inflation fears. Mortgage rates in the US shot up this week with, for example, 30-year rates climbing to 6.63%, up 0.37% on the week and the highest level since 1 August last year."