Nationwide building society yesterday announced a number of sharp cuts to its mortgage rates, giving hope to borrowers that more competitive pricing may return to the market. Many two-year fixed rates were reduced by 30 basis points, taking the best rates for borrowers with large deposits down to 6.18 per cent. Some tracker rates also fell by a smaller margin of 10 basis points.

"This reflects falling swap rates, which dictate the future movement of fixed rates and have dropped to levels last seen in mid-May," said Melanie Bien, at Savills Private Finance.