Mortgage rates have fallen for the first time in two months, as several lenders have reduced their costs across both residential and buy-to-let ranges. The move could benefit homebuyers and homeowners who are looking to remortgage or switch to a better deal.

According to Moneyfacts, a financial data provider, the average rates on two-year and five-year fixed rate residential mortgages have dropped slightly, following changes from lenders such as Nationwide, Halifax, TSB and HSBC. The same trend was observed for buy-to-let mortgages, which are popular among landlords and investors.

The rate cuts come after a period of rising mortgage costs, driven by the expectation that the Bank of England will increase the base rate to curb inflation. The base rate, which influences the cost of borrowing, is currently at 5%, but some analysts predict that it could reach 5.5% or even 6% by the end of the year.

However, some recent economic data have suggested that inflation may be easing and that the economy may be slowing down, which could reduce the pressure on the Bank to raise rates further. This has led some lenders to lower their rates in order to attract more customers and gain a competitive edge in the market.

For example, Nationwide has cut selected fixed mortgage rates by up to 0.55%, with the largest reductions applied to first-time buyer products¹. HSBC has also reduced rates across a wide range of products and reintroduced its cashback incentive for some customers². TSB has lowered selected five-year fixed residential products by up to 0.4%³, while Halifax has cut select two, five and 10-year fixed rates by up to 0.71%⁴.

Mortgage brokers have welcomed the rate reductions and hoped that they would trigger more competition among lenders. They have also advised borrowers to shop around for the best deals and to act quickly before rates go up again.

While average rates are still well above the 6% mark, mortgage experts have highlighted that rates could continue to fall if the economic outlook remains uncertain and if the Bank of England adopts a more cautious approach to raising rates. However, they have also warned that rates are unlikely to return to the historic lows seen in previous years.