Here come the big cuts on home loans – but the crunch has not gone away

Mortgage offers

HSBC, NatWest and Royal Bank of Scotland have announced dramatic cuts to mortgage interest rates, but experts warn this is not the start of a thaw in the credit crunch.

NatWest and RBS are offering cuts of up to 0.7 per cent on a range of fixed-rate mortgages, with deals starting at 3.99 per cent for a two-year fix on a loan-to-value of 60 per cent. But for those without a 40 per cent deposit, the rate is down just a quarter point at 6.39 per cent, despite the base rate fall of 0.5 per cent.

HSBC is set to offer its "lowest mortgage rate ever" – a two-year discount deal at 2.99 per cent with a loan-to-value of 60 per cent maximum. Its new lifetime tracker, for an LTV of 75 per cent, is on the market at 4.09 per cent.

"Unfortunately, these changes are unlikely to signal the beginning of an easing in the mortgage market," said Melanie Bien at broker Savills Private Finance. "These companies are part of a central group of big, strong lenders – the only ones that can afford it.

"Although the headline rates seem good, these developments will only be good news for those who are eligible. The criteria for these new, cheaper products are still very demanding. Sadly, nothing has changed there."