Homeowners with mortgages have seen their monthly repayments skyrocket in line with interest rate rises, with mortgage rates increasing to more than 6% for both two- and five-year fixed-rate deals in recent weeks.

But the unexpected drop in inflation last week, and the pause in base rate hikes has allowed for better rate options to enter the property market.

Mortgage holders and homebuyers have received a fresh boost over the past few days as lenders have continued reducing rates – with some fixed deals now available below 5%.

Following the Bank of England’s decision to halt interest rate hikes last week – holding the base rate at 5.25% – several lenders, including NatWest, TSB, Nationwide and Virgin Money have reduced mortgage rates.

Some began cutting rates after the shock fall in inflation to 6.7% was announced last Wednesday, signalling an end to the need for more aggressive action by the Bank of England.

Lucian Cook, head of residential research for Savills, commented: “The inflation numbers should bring more economic certainty and confidence to lenders. This will give a further boost to competitive pricing in the mortgage markets and help buyers reliant on borrowing better compete with the cash buyers.”

Experts believe five-year rates will see the biggest fall in rates although two-year fixes will also come down.

Nick Mendes of brokers John Charcol said: “I wouldn’t be surprised if we see rates of 4.5% now for five-year fixes in October.”

David Hollingworth, of brokers L&C, added: “There is evidence that the market received inflation news positively and that should feed through to lower mortgage rates. I think it will give extra momentum to fixed rates coming down.”