It has come to light that as competition is on rise in Britain's high street, mortgage lenders are dropping their interest rates to lure homebuyers. The Bank of England published figures today according to which, Britain’s major lenders providing net lending of £600 million last month is lower from £700 million in February.

Skipton Building Society was the first one to cut 0.5% points off the rate for its two, three and five-year fixed-rate deals and also some of its mortgages. Following Skipton, Barclays has also slash its rates on its Woolwich tracker and fixed rate mortgage deals by up to 0.32 % points.

Moreover, at Halifax and Northern Rock, Managers have also stepped into the price war by lowering the rates of their two and three-year fixed rate buy-to-let mortgages by up to 0.4 percentage points.

It means homeowners with a £200,000 mortgage from Skipton’s newly discounted two-year fixed rate will fill their pockets with lots of money as their £1,076-a-month repayments fall to £1,021 a month — saving £636 a year.

Ray Boulger, Senior Technical Manager at mortgage broker John Charcol said that soon the market will be witnessing cheapest five-year fixed-rate deals. If the current scenario prevailed then the lenders will see a great competition.