Market Boosted by Nationwide Rate Cut News

Mortgage lender Nationwide has moved to cut rates, in further good news for the UK home loans market.

The firm said that it would reduce some of its home loans deals for the second time in two weeks, cutting rates by up to 0.46 percent. Both fixed rate and tracker products are covered by the changes.

Nationwide's move follows the news earlier this week that Alliance & Leicester will be taken over by Spanish financial firm Santander, in a £1.25 billion deal. Shares in the UK lender soared as a result of the news, with many analysts taking it as a sign of the profits potential of the mortgage sector as a whole.

Reductions to rates are particularly welcome in the current financial climate, as the ongoing global credit crunch has led to many lenders tightening their criteria and even withdrawing many of their cheaper loans from the market.

Commenting on the news to the BBC, Drew Wotherspoon at brokers John Charcol said: "With one of the country's leading lenders taking this welcome step, this should be a sign of things to come."

The changes come into effect on Friday.