The upward march in fixed mortgages rates has gone into reverse, according to figures from a financial information website.
The average two-year homeowner mortgage rate on the market edged down to 6.79% on Thursday from 6.81% the day before, Moneyfactscompare.co.uk said.
Five-year fixes fell back to 6.31% on Thursday, down from 6.33% on Wednesday.
The last weekday that both two and five-year fixed-rate mortgages fell compared with the previous day was in May, Moneyfacts said.
On Wednesday, it emerged that inflation had slowed quicker than expected, giving a glimmer of hope for under-pressure mortgage borrowers.
The Office for National Statistics said the Consumer Prices Index fell to 7.9% last month, down from 8.7% in May.
The Bank of England uses base rate rises as a tool to subdue inflation.
The Bank is still expected to raise interest rates – currently at 5% – at its next meeting on August 3 as it battles to bring inflation back to its 2% goal.
But experts have said the bigger-than-expected fall in inflation could see the Bank’s policymakers opt for a smaller increase of 0.25 percentage points rather than another 0.5 percentage point rise.
There are huge hopes interest rates on mortgages will fall, but it could take a few weeks for that kind of sentiment to surface in the market - especially with another base rate decision on the horizon— Rachel Springall, Moneyfactscompare.co.uk
Some mortgage experts have said swap rates, which lenders use to price fixed-rate mortgages, have been calmer in the past few days, resulting in fewer product pulls from lenders.
The Co-operative Bank was among some lenders launching new fixed-rate mortgage deals on Thursday.
Rachel Springall, a finance expert at Moneyfactscompare.co.uk, said: “The mortgage market has seen some competitive deals surface this week, but it will be down to the borrower to decide whether now is the time to grab a deal or wait and see what may surface in the coming weeks.
“There are huge hopes interest rates on mortgages will fall, but it could take a few weeks for that kind of sentiment to surface in the market – especially with another base rate decision on the horizon.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “While swaps fell on the inflation news and are fairly steady today, there is unlikely to be any immediate change in mortgage pricing from the vast majority of lenders.
“Lenders are likely to adopt a ‘wait and see’ approach until we have a calmer or less volatile period in the swap market before reducing rates.”
The signs are positive but inflation is still very high, so the Bank of England will undoubtedly increase the base rate a bit further— Justin Moy, EHF Mortgages
Myron Jobson, senior personal finance analyst at interactive investor, said: “For those seeking to buy or remortgage, it is worth consulting a mortgage adviser to explore your options.”
Writing on website Newspage, Kirsty Wells, a director at Blueprint Mortgages & Protection, said: “Lenders have still been emailing this week to advise of rate increases, so I think it is too early to breathe a sigh of relief just yet.”
Justin Moy, managing director at EHF Mortgages, said on the website: “The signs are positive but inflation is still very high, so the Bank of England will undoubtedly increase the base rate a bit further.”
Elliot Cotterell, director at Windsor Hill Mortgages, told the website: “Lenders tend to factor in changes to their rates in anticipation of increases to the Bank of England base rate and rather than reducing them straight away, I think we are more likely to see them hold and take a breath rather than jump into reducing rates.
“I’d like to think we’ll see a pause on the aggressive rate pulls but I don’t think we’ll be lucky enough to see a flurry of lenders reducing rates just yet.”
Andrew Montlake, managing director of mortgage broker Coreco, said: “Whilst this may not yet mean we see a wholesale fall in mortgage rates, lenders should at least now move away from sudden rate hikes and also enjoy a period of calm reflection.”
