IS the message from the Bank of England - that the housing market can only be rescued with lower rates for borrowers - at last getting through to big lenders?

When Nationwide BS started flagging a round of cuts on fixedrate loans over two and five years, Britain's biggest building society indicated that big lenders might start to follow the Bank base rate downwards.

This came after several months in which the two moved in opposite directions.

With savers' money gushing into building societies, some might feel this move was long overdue.

Actually, it is a dip in swap rates on funds raised on money markets, which enables Nationwide to offer two-year fixes from 5.95 per cent for buyers, and from 6.15 per cent for remortgagers, both with a £599 fee and maximum loan to value (LTV) ratio of 90 per cent.

On three-year fixes, Nationwide might allow an LTV of 95 per cent.

Nationwide's move, hard on the heels of smaller falls on fixes at Abbey and Royal Bank of Scotland (RBS), is "a meaningful reduction", says Ray Boulger, of leading broker Charcol.

Fixed-rate loans are far more popular with borrowers than tracker rate loans: Charcol figures show that 78 per cent of mortgages it arranged in April were fixes - "mainly because fixed rates were a quarter to half a per cent cheaper than trackers, which mostly start above six per cent".

Hamptons Mortgages, a rival broker, confirms that fixed-rate mortgages have nearly doubled their share of loans arranged since January.

Boulger said: "Soaring demand for fixed-rate loans might imply borrowers are nervous about the strength of the economy and fear rates will soar as they did in the early Nineties. But such a hike is unlikely."

Another ray of hope is HSBC's decision to extend its Rate Matcher mortgage for a further six weeks until June 29.

This is available to all UK homeowners whose fixed rate mortgages mature before August 31. With a maximum LTV of 80 per cent, Rate Matcher enables any borrower at the end of a fix to refix at the same figure for a further two years.

In theory, the re-fix could be as cheap as 4.54 per cent - although any borrower taking the maximum £250,000 from Rate Matcher at that rate pays a fee of £4,599.

HSBC, which has written more than £100m of mortgage business each working day since launching Rate Matcher on April 14, says two-thirds of its customers pay a fee of less than £1,000.

Any reduction in rates is helpful, but Boulger says "We are only now nearing the end of the beginning of the crisis caused to housing markets by the credit crunch.

"There were 25 lenders offering 100 per cent loans in January, and now there are only two - Bank of Ireland and Bristol and West, which require a parent or grandparent named on the mortgage deed in an enhanced guarantor scheme.

"There is still strong demand for 95 per cent loans, but buyers at that level must pay a much higher price.

"Typically, the premium for borrowing 95 per cent of price as opposed to 75 per cent now runs at one per cent, against an average 0.4 per cent before the credit crunch, and borrowers taking 95 per cent loans can expect to have a higher lending charge (about 1.5 per cent of mortgage advance) added to their mortgage at the start."

Charcol figures show that a borrower with a £150,000 mortgage and a ten per cent deposit pays £93 more in interest each month than a borrower with the same mortgage who put down a 25 per cent deposit.

Andrew Haggar, at Moneyfacts, said the drastic fall in the supply of 95 per cent loans - from about 900 providers a year ago to barely 200 today - has caused the market to grind to a halt.

"Lenders still want to carry on mortgage business, but they are far more selective on LTV limits and credit scoring," he says.

"Eventually, one lender will decide to lend more bullishly, and others will follow, but all lenders are waiting for somebody to make that first move."

Nobody knows exactly where the market is heading. As the notes of Housing Minister Caroline Flint revealed last week: "We can't know how bad it will get."

Boulger said recovery is at least a year away.

"First-time buyers will be largely absent from the market for two years, from June last year to mid-next year, at which point the market could begin to stabilise and values cease to decline.

Boulger urged first-time buyers to monitor the market in the hope of finding a distressed seller ready to accept perhaps ten to 15 per cent below what a property is worth.