More deals under 4% are coming on to the market, as the Bank of England's (BoE) decided to keep interest rates on hold, with another mortgage war looming that is set to benefit those trying to get on the property ladder.

The average rate on a two-year fixed deal this week stood at 5.28%, lower than last week's 5.74%, while average rates for a five-year deal came in at 4.84%, also lower than the previous 5.24%, according to figures from Uswitch.

The Bank of England has kept interest rates at 5% but investors predict two cuts will happen before the end of the year, with the first expected to take place in November.

Inflation has also remained unchanged at 2.2.% in August, in good news for mortgage holders. Alice Haine, personal finance expert at Bestinvest, said: “For homeowners and first-time buyers, stable inflation combined with slightly more competitive mortgage rates means affordability levels are improving for those shopping around for a new home as their money can stretch that little bit further."

Mortgage rates could fall to 3.5% by the end of the year as markets are betting on two more interest rate cuts by the end of the year.

Barclays has launched a range of new mortgage products, including a new lowest home loan rate on the market, just 24 hours after Nationwide released the first sub-3.75% deal.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “No sooner does one lender offer a sub-3.75% five-year fix, then another joins the fray, with Barclays launching a market-leading 3.71%.

“The clear direction of traffic for mortgage rates is downwards, with lenders gently easing pricing as they compete for business."

Mortgage lenders' attempts to lure in first-time buyers have stepped up with the UK's biggest building society allowing some to borrow more.

Nationwide said that from now on, new borrowers could request a mortgage up to six times their income with a 5% deposit. But it would only be available for those taking out a five- or 10-year fixed-rate deal.

Sarah Coles, personal finance columnist at Yahoo Finance UK and head of personal finance at Hargreaves Lansdown, said: "Fixed rate deals are on their way down, because the cuts expected later this year are already priced into these products."

"It’s one reason why mortgage approvals have risen, and buyers are returning to the market — because the feel-good factor injected into property by the first Bank of England rate cut is backed by slightly more affordable mortgages," she added. "The prospect of a remortgage isn’t looking quite so hideous either now."

HSBC mortgage rates

HSBC (HSBA.L) has a 3.82% rate for a five-year deal. This is unchanged from last week, and for those that have a Premier Standard account with the lender this rate has come down to 3.79%.

Looking at the two-year options, the lowest rate comes in at 4.14% with a £999 fee, which is also unchanged

Both cases assume a 60% loan to value (LTV) mortgage, meaning buyers need to have at least 40% for a deposit.

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HSBC offers 95% LTV deals, meaning you only need to save for a 5% deposit. The rates are much higher, however, with a two-year fix coming in at 5.75% or 5.19% for a five-year fix.

This is because the rate someone can get will be determined by their financial situation and the size of their deposit. The larger the deposit, the lower the LTV, allowing buyers to access better deals because lenders consider them less risky.

“The significant aspect of HSBC’s offer is the combination of a low rate and a manageable fee, making this deal highly attractive,” said Nick Mendes of John Charcol brokers.

NatWest mortgage rates

NatWest (NWG.L) is offering 3.77% for a five-year deal with a £1,495 fee, as the bank removed its market-leading 3.71% offer.

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For a two-year fix, the cheapest deal comes in at 4.05%, also unchanged from the previous week. In both cases, you'll need at least a 40% deposit to qualify for the rates.

Santander mortgage rates

At Santander (BNC.L) a five-year fix comes in at 3.80% with a £999 fee, assuming you have a 40% deposit — which is the same as last week's deal.

For a two-year deal, the cheapest customers can get is 3.99% with the same £999 fee, which is also unchanged. This is currently the only one of two sub-4% deal available on the market for a two-year fix.

Barclays mortgage rates

Barclays (BARC.L) has launched a market leading 3.71% five-year deal for prospective homebuyers with a 40% deposit (60% LTV).

When it comes to two-year mortgage deals, the lowest you can get is 4.22%.

Nationwide mortgage rates

Nationwide (NBS.L) is offering a five-year fix at 3.74%, which comes with a £999 fee and requires a 40% deposit. This is lower than the 3.99% rate it had offered last week.

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Nationwide offers a two-year fixed rate for home purchase at 3.89% with a £999 fee — also for borrowers with a 40% deposit.

Halifax mortgage rates

Halifax, the UK’s biggest mortgage lender, offers a two-year fixed rate of 4.12%, with a £999 fee for first-time buyers, which hasn't changed from last week.

The lender, owned by Lloyds (LLOY.L) has a five-year rate going for 3.80% (also 60% LTV), which is lower than the previous week's 3.81%.

It also offers a 10-year deal with a mortgage rate of 4.93%, which hasn't moved from last week’s offers.

Cheapest mortgage deal on the market

With mortgages below 4% back on the market, prospective homeowners are starting to have some choice when it comes to finding a good deal.

Barclays currently has the cheapest deal on the market. However, its 3.71% offer requires a 40% deposit, so you will need a hefty amount of cash upfront to secure the deal. Nationwide is close behind, with a 3.74% deal for a five-year fix.

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Given the average UK house price sits at £292,505, a 40% deposit equates to about £117,000.

Borrowers would need to spread their home loans over more than 70 years to afford the same mortgages on offer just two years ago, banks have said.

There is also a new mortgage product promising to help first-time buyers get on the property ladder with just a £5,000 deposit. Yorkshire Building Society is offering a deal that enables first-time buyers across England, Scotland and Wales with a £5,000 deposit to purchase a property valued at up to £500,000.

This means first-time buyers could get on the ladder with as little as a 1% deposit.

Also, lender April Mortgages is now offering buyers the chance to borrow up to six times their income on loans fixed for five to 15 years, from a deposit of 5%. Both those buying alone and those buying with others can apply for the mortgage.

The company, which is part of an independent Dutch asset manager DMFCO has interest rates starting at 5.20%, with an application fee of £195.

Skipton Building Society has also said it will allow first-time buyers to borrow up to five-and-a-half times their income, in an effort to support more borrowers on to the housing ladder.

Will mortgage rates go down in 2024?

Mortgage holders and debt borrowers have been forced to pay record-high repayments in recent years due to the UK's hiked base rate being passed onto customers by banks and building societies. Until now, the consensus was that interest rates have peaked and that 2024 will see rate cuts as inflation eases.

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However, even with inflation close to the BoE's target of 2%, traders are now pricing in just two more rate cuts, compared to expectations of five cuts at the start of 2024.

Matt Smith, Rightmove’s mortgage expert, said: “While those looking to take out a mortgage soon shouldn’t expect to see drastically lower mortgage rates, we would expect the downward trend we’ve started to see continue."

He said that once there are "further reductions to the base rate, people should really start to see the impact. However, it’s important to keep in mind that mortgage rates are widely expected to eventually settle at higher levels than previously, with the market view that the base rate may eventually fall to about 3.25%."

About 1.6 million existing borrowers have relatively cheap fixed-rate deals expiring this year.

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