The Nationwide Building Society is reducing mortgage rates for customers with small deposits using its Save to Buy scheme tomorrow (15 October).

All of its 95% LTV Save to Buy rates have been reduced by up to 0.70 percentage points.

With Save to Buy, savings accounts can be opened with a minimum of £50, with customers saving at least £50 per month for six months or more. First time buyers and home movers will then be eligible to apply for a Nationwide fixed rate mortgage. If the customer goes on to take a Save to Buy mortgage, depending on how much they save, there is also a cashback reward of up to £1,000.

The new rates for the 95% LTV deals are as follows:

• Two year fixed rate is 4.79% with a £999 fee (with a reduced fee of £499 for first time buyers)
• Three year fixed rate is 5.19% with a £999 fee for new borrowers (£499 for first time buyers)
• Five year fixed rate is 5.39% with a £999 fee (£499 for first time buyers)

Existing mortgage customers benefit from an additional 0.10 percentage point discount on the new customer rates.

Meanwhile, the 95% LTV five year fixed rate deals for existing borrowers will be reduced by 0.50 percentage points, with a rate of 5.49% with a £999 fee, 5.69% with no fee.

Richard Napier, Nationwide’s divisional director of mortgages and savings, said: “With issues of affordability of increasing importance, we are aiming to help aspiring homebuyers with smaller deposits to have the means to secure a home of their own.

“With Nationwide’s established Save to Buy scheme, customers who have demonstrated a history of saving are being given the opportunity to access very competitive mortgage rates. This shows that good savings habits and strong credit quality go hand in hand.”

In addition, as part of Nationwide’s ongoing Loyalty Rate Mortgages initiative, selected rates for existing mortgage customers will be reduced. The 85% LTV two-year fixed rate with no fee is being reduced to 3.29, while the 85% LTV two-year tracker rate with £999 fee is reduced to 2.69%.