Better than expected inflation data allows banks to ease rate rises.
Three of Britain’s biggest lenders have cut mortgage rates for the second time in two weeks.
Nationwide announced a reduction of up to 0.55 percentage points – its largest since February – taking effect on Wednesday.
TSB will also cut rates by up to 0.55 points from Friday, while HSBC said its rates would be lowered on Wednesday.
Mortgage costs still remain high, with the average two-year rate at 6.84pc, largely unchanged from 6.83pc two weeks ago, according to data firm Moneyfacts.
The average five-year rate has edged up slightly from 6.34pc to 6.35pc during the same period.
Some lenders have begun cutting rates off the back of better-than-expected inflation data last month.
Inflation eased to a 16-month low of 7.9pc in the year to June. This was down from 8.7pc in May and well below the 8.2pc expected by economists.
Markets are now pricing in a peak Bank Rate of between 5.75pc – down from previous predictions of 6.75pc.
However, the Bank of England signalled last week that interest rates could remain above 5pc until 2026 as it raised them to a 15-year high of 5.25pc.
Swap rates, which are based on market expectation for interest rates and reflect the cost of borrowing for lenders, have plunged by 0.7 percentage points since their peak on July 6.
David Hollingworth, of broker L&C Mortgages, said the moves by major lenders were a positive sign for homeowners, but warned: “The danger is that borrowers will start waiting around for lower rates, but we’re not at the point where we can say it’s a price war just yet.
“Hopefully when we get more positive data the cuts will snowball a bit more. All eyes will be on the inflation data released next week.”
Aaron Strutt, of broker Trinity Financial, said lenders’ borrowing costs have been coming down, which is reflected in falling mortgage rates and offers hope of more cuts to come.
He said: “It’s still difficult for people – the rates have come down a bit but not by a huge amount.”
Mr Strutt said there are now two-year deals available for homeowners below 6pc, and some five-year deals as low as 5.3pc.
Adrian Anderson, of broker Anderson Harris, said the cuts were “long overdue”.
He said: “More banks will follow suit because the cost of funding has come down, but not all banks have been repricing as we expected. It all feels a bit slow.”
This article was written by Alexa Phillips from The Telegraph and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.