Other banks have also cut rates in recent days, including HSBC, TSB and Nationwide, which decreased the price of some of its products by up to 0.55 percentage points.

It comes despite the Bank of England's decision last week to hike interest rates for the 14th time in a row as part of attempts to bring down inflation.

Halifax, which is the UK's biggest mortgage lender, said the new deals would be introduced on Friday and would include a five-year fixed rate offered at 5.28%, a 0.71 percentage point drop.

Two-year fixed-rate loans will fall by as much as 0.27 percentage points.

The rush to slash rates comes amid a slowdown in the housing market, with experts warning that stretched affordability for mortgages is hitting demand.

Nationwide reported the biggest drop in annual house prices in 14 years on its index last week, after it found that property values declined 3.8% in July.

Separate figures by Halifax reported a 2.4% year-on-year fall in July.

Imogen Pattison, an assistant economist at Capital Economics, forecast that price drops would continue in the coming months and may accelerate next year.

The Bank of England has warned that interest rates are likely to remain high in the coming months, although inflation is coming down and recently fell to 7.9%, in a bigger than expected drop.