Home owners got a big boost ­yesterday as lenders slashed ­mortgage rates in a new price war.

Experts predicted a major improvement in the property market after the Bank of England held interest rates unchanged at 0.5 per cent.

They say keeping rates at their record low for the 26th month running has given lenders the confidence to cut the cost of a range of mortgage products. And yesterday the rivalry began. Big hitters such as Nationwide, Barclays’ lending arm the Woolwich, and Northern Rock all announced they were slashing the cost of fixed-rate mortgages, and other major players are expected to follow suit.

Nationwide, the UK’s biggest building society, cut rates by up to one per cent on some of its 90 and 95 per cent loan-to-­valuation deals. It also reduced its product fee by £500 for those moving home – effectively a 50 per cent cut. Barclays trimmed some of its rates by up to 0.1 per cent and reduced arrangement fees, while Northern Rock cut its deals by up to 0.57 per cent.