High street lenders are reacting to both competition amid a barren purchase market and cheaper wholesale money costs, with major lenders announcing further mortgage rate cuts. This morning, both HSBC and TSB announced cuts, following on from Virgin Money yesterday.

Brokers welcomed the news but one said "lenders need to put an end to the phoney war and drive down rates at higher loan-to-values, as that's the way to inject real life into the mortgage and property market." Charles Breen, director at Wellingborough-based broker, Montgomery Financial, told Newspage: "As rates continue to snowball downhill, this is yet more great news for homeowners across the country.

"With more lenders reintroducing rates starting with a four, the housing market should pick up. Rates will keep falling as lenders are in a royal rumble for market share to hit their lending targets off the back of the positive news on the base rate and inflation.

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"The inescapable fact is that to make money, lenders have to lend money and it's clear that they are competing hard to lend it. The net winners are going to be mortgage clients with lower monthly payments. It's game on." Kylie-Ann Gatecliffe, director at Selby-based broker, KAG Financial, said: “Lenders are having to be more competitive than ever to stand out right now, as the rate reductions keep rolling in.

"These latest cuts are great news for those looking to get on the ladder, move or remortgage. It has been a rocky year so it's great to see it ending with a fiery rate war. Hopefully, it will continue into the new year, to allow more buyers to bounce back with confidence of a more affordable outlook.”

Meanwhile, Stephen Perkins, managing director at Norwich-based broker, Yellow Brick Mortgages, said: “Christmas is coming early to homeowners across the country as more of the top lenders reduce their rates following the recent positive news on inflation and growing confidence in the short-term economic outlook. The competition for market share during the rest of the year looks set to be explosive, so this is a fantastic time to secure a rate on your next mortgage.”

Gary Boakes, director at Salisbury-based broker, Verve Financial, said: “With swap rates having dropped by around 0.5% over the past month, it is no surprise we are seeing rates reduced and lenders making headline plays for business at the end of the year. I have already seen that rates dropping below 5% is having a positive knock-on effect on the market, with more first-time buyers out looking and home movers looking to put their property on the market. With the continuation of positive news, the market is only going to improve going into the new year.”