Homebuying deals abound: Vivien Goldsmith and Maria Scott discover what this week's base rate cut will mean for borrowers and for those with money to invest

MORTGAGE rates are dropping to record low levels. But behind the headline rate - normally 7.99 per cent at banks and building societies - is a web of discounts and special deals aimed at first-time buyers and those with large deposits as well as larger loans.

Halifax Building Society has seven standard rates plus a customer loyalty 0.75 percentage-point discount and fixed-rate offers. These are based on a 7.99 per cent rate, and give discounts from 0.74 to 1.74 points for first-time buyers.

Northern Rock is giving a discount of 2.1 points where the deposit is at least 25 per cent to bring the rate down to 5.89 per cent until June 1994.

Cheltenham & Gloucester gives a one-year discount of 1 point on loans with at least a 10 per cent deposit, and a 2-point discount on loans under pounds 60,000 with a 40 per cent deposit.

The centralised lenders, which raise cash in the money markets - unlike the building societies, which rely heavily on savers' deposits - are coming back into the picture as rates fall.

Bank of Ireland is cutting its rate to 7.95 per cent from 1 March. Mortgage Express falls to 8.45 in April.

The Household Mortgage Corporation is dropping its rate to 7.69 per cent on 1 April. This will be the first time that its mortgage rate has fallen below the building societies' since June 1988.

Nationwide Building Society is launching a two-year fixed rate mortgage for first-time buyers with the rate set at 5.75 per cent in the first year and 6.75 in the second on a repayment or endowment basis.

First-time buyers will need a 10 per cent deposit and will have to take out the society's Mortgage Payment Cover policy.

Mortgage lenders have been slow to launch new fixed-rate deals following the base-rate change. Woolwich Building Society is offering a three-year fix at 6.95 per cent and Northern Rock has rates fixed at 7.5 per cent until 1 January 1997 and 5.99 per cent until 1 June 1994. Arrangement fees are pounds 250 and pounds 150 respectively and borrowers must buy buildings and contents insurance.

BNP Mortgages is offering three fixed-rate deals at rates between 6.85 and 7.69 per cent, depending on the ratio of loan to property value and on purchase of a mortgage protection policy.

----------------------------------------------------------------- MORTGAGE PAYMENTS BEFORE AND AFTER THE RATE CUT ----------------------------------------------------------------- REPAYMENT MORTGAGES ENDOWMENT MORTGAGES 10.95%* 8.55% 7.99% 10.95%* 8.55% 7.99% LOAN pounds pounds pounds pounds pounds pounds Pounds 30,000 238.47 203.31 195.44 205.33 160.33 149.83 Pounds 40,000 325.94 273.65 262.08 296.58 231.58 216.41 Pounds 50,000 424.53 355.41 340.08 387.83 302.83 283.00 Pounds 60,000 523.12 437.18 418.08 479.08 374.08 349.58 Pounds 70,000 621.71 518.94 496.08 570.33 445.33 416.16 Pounds 80,000 720.30 600.71 574.07 661.58 516.58 482.75 Pounds 100,000 914.47 764.24 730.07 844.08 659.08 615.91 Pounds 120,000 1,114.65 927.77 886.07 1,026.58 801.58 749.08 Pounds 150,000 1,410.42 1,173.06 1,120.07 1,300.33 1,015.33 948.83 Pounds 200,000 1,903.37 1,581.89 1,510.06 1,756.58 1,371.58 1,281.75 ----------------------------------------------------------------- *Current rate for borrowers on annual review ----------------------------------------------------------------- Source: Halifax Building Society -----------------------------------------------------------------