NatWest cut mortgage rates across products ahead of Bank of England interest rate decision

The reductions come after inflation fell to the Bank’s target of two per cent for the first time in nearly three years.

This will come as a small relief for those coming off fixed contracts as they may be able to secure cheaper deals.

Remortgagers opting for a five-year fix may be able to secure a rate of 4.41 per cent.

NatWest is not the only lender to introduce reduced mortgage rates.

Co-operative Bank has reduced loans by up to 0.22 percentage points and Nottingham Building Society has lowered deals by 0.24 points.

Many banks and building societies are anticipating rate cuts from the Bank of England this week at a Monetary Policy Committee meeting.

It is widely predicted that the Bank of England will keep the base rate at 5.25 per cent at midday on Thursday, despite inflation reaching the central bank’s two per cent target.

According to Right Move, the current average mortgage rate for a five-year fixed rate mortgage is 5.03 per cent, down from 5.04 per cent last week.

The current average rate for a two-year fixed rate mortgage is 5.44 per cent, unchanged from last week.

The lowest available five-year fixed rate is 4.28 per cent and the lowest available two-year fixed rate is 4.75 per cent, both unchanged from last week

Matt Smith, mortgage expert at Right Move said: "Hopefully today’s inflation drop is the first step on the journey towards lower mortgage rates in the second half of the year.

"Market expectations are still that the first Bank of England rate cut is more likely to be later in the summer rather than on 20 June, but at least today’s news will keep us on course rather than throwing a curveball."

House prices increased slightly for a second month in a row, according to latest figures from the Office of National Statistics.

In April, the average home sold for £281,000, 1.1 per cent more than 12 months ago. This was up from 0.9 per cent in the 12 months to March, representing the second consecutive month registering an annual increase after eight months of falls.

The house price figures come alongside news that inflation has fallen back to the Bank of England's two per cent target.

This means the average price of goods and services is now 2 per cent higher than it was last year. The hope is that the Bank of England will soon consider cutting interest rates, which may result in lower mortgage rates.

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Nicky Stevenson, managing director at national estate agent group Fine & Country said: "As we expect the economic landscape to continue improving, it's likely that we will see a spike in activity as the year progresses, especially with an interest rate cut from the Bank of England on the horizon.

"This would positively affect home buyers by making mortgages more affordable, increasing consumers' spending power and helping them to get their desired properties more easily."