Santander and NatWest reduced their rates on Tuesday, following similar moves by Barclays and HSBC last Friday. The reductions are a response to a steady fall in swap rates, the rates at which banks lend to each other, which are used to price fixed-rate mortgages.

This follows last week’s consumer price index data, which held steady at 3.8%, defying economists’ expectations of a rise. Consequently, financial markets now anticipate that the Bank of England may cut its base rate, currently 4%, sooner than previously predicted.

Among the new deals, NatWest is offering the market’s lowest two-year fixed rate at 3.77% for buyers with at least a 40% deposit (60% loan-to-value). Barclays and HSBC have also launched competitive two-year fixed rates at 3.86% and 3.84% respectively.

Industry experts have described the moves as a “mini price war” designed to stimulate a market that has slowed ahead of the upcoming budget on 26 November. While the rate cuts are modest, brokers note their significance as a “change of direction” that could improve borrower confidence and encourage other lenders to follow suit.

The rate cuts are welcome news for the estimated 950,000 homeowners whose fixed deals are set to expire within the next six months. Experts are advising these borrowers to consider securing a new rate now, ahead of any potential market volatility following the budget. Homeowners can reserve a new mortgage offer up to six months in advance, providing protection against rate rises while retaining the flexibility to switch to a cheaper deal if one becomes available before their current term ends.