Mortgage rates, which have already fallen in some cases to record lows thanks to the Funding for Lending scheme, could reduce further later this year when a number of new lenders are expected to enter the market, further increasing competition.

NBNK and Home & Savings Bank are both slated to start actively lending in the near future, while another major financial institution is also rumoured to launch a bank in 2013.

Mark Harris, of mortgage brokers SPF Savills, said: “New mortgage entrants can only be good news for borrowers.With more lenders we expect to see improved lending conditions, which will in turn mean better pricing and availability.”