Nationwide and Abbey became the latest groups to announce they were reducing rates on their fixed rate deals.

They followed other major lenders such as Cheltenham & Gloucester, first direct, the Post Office and Yorkshire Building Society, which have already cut their home loans rates this month.

The flurry of rate cuts has caused the average interest rate charged on a two-year fixed-rate deal to fall from 4.93pc at the beginning of December to 4.86pc now.

Nationwide announced the biggest range of cuts, reducing the interest charged on about a quarter of its mortgages by up to 0.29pc, with the cost of tracker and fixed-rate deals falling.

The move leaves two-year fixed rate mortgages for people borrowing up to 70pc of their home’s value at 3.69pc, while a two-year tracker product for someone with a 30pc deposit starts at 2.64pc. Both deals come with fees of £995.

Meanwhile, Abbey cut its four-year fee-free fixed-rate mortgage for current account customers borrowing 75pc of their home’s value by 0.1pc to 4.89pc. It also launched new three-year and five-year fixed-rate deals.

A total of 13 lenders have reduced interest rates on their fixed rate mortgages so far this month, with Newcastle Building Society and the Post Office both cutting them by more than 1pc.

Newcastle Building Society also reduced the minimum deposits it requires from 25pc to 20pc.