Nationwide, Britain's biggest building society, will cut its fixed-rate mortgage deals on Wednesday by up to one percentage point, reflecting a fall in the cost of wholesale mortgage funding.

A three-year, fixed-rate deal for borrowers with a 25% deposit will fall from 5.88% to 4.88%, a saving of £125 a month on a £150,000 interest-only mortgage. However, the best deals continue to be reserved for borrowers with at least a 40% deposit or equity stake, worth around £61,200 on the average home.

The Times