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NatWest has become the latest major lender to offer a sub-4 per cent mortgage as a fresh price war has erupted between Britain’s banks.

The high street lender began offering a 3.89 per cent deal with a £1,495 fee on Tuesday, following hot on the heels of other attractive offers for homeowners from Santander, Barclays, HSBC and Halifax in recent days.

Many of the new deals are focused on people who can offer an up-front fee, large deposits and and are premium banking customers of the respective lender.

For example, last week Barclays started offering a 3.83 per cent five-year fixed rate for home buyers with a 40 per cent deposit, which has a £899 product fee, but it is only for its premier banking customers.

HSBC’s best deal, at 3.92 per cent, is also available to premier banking customers and requires a deposit of 40 per cernt and fee of £1,499.

Nationwide fired the starting pistol on the price war two weeks ago when it started offering a five-year fixed rate deal at 3.99 per cent.

The increased competitiveness from lenders comes after the Bank of England chose to cut interest rates from their 16-year high of 5.25 per by a quarter of a point, to 5 per cent at the start of August.

The cut brought some welcome relief to those on tracker mortgages who have seen their annual payments cut by an average of £340 as a result of the cut in rates.

It has also been a boon to the 700,000 fixed-rate mortgage deals which are due to end in the second half of this year – equating to around 4,000 homeowners per day potentially having a rate shock when their lower-rate deal ends.

Riz Malik, director at R3 Mortgages said: “Not even an hour into the new week and NatWest have shot out of the blocks with even more rate cuts.

“With Santander also announcing cuts late on Friday this should be another fantastic week of sizzling rates as the UK basks in the sun. All eyes, of course, are on Wednesday and the latest inflation data. That will be a key influencer of what happens to rates next.”

David Stirling, independent financial advisor at Mint Mortgages & Protection said: “The Olympics may have ended yesterday, but the competition between lenders continues with NatWest cutting rates first thing on Monday morning. Hopefully there are no false-starters and the race to cut more rates to lower than 4% continues to hot up this week between the banks.”

Mortgage rates have been considerably above 5 per cent due to a succession of interest rates rises as the Bank tried to get soaring inflation under control.

The situation was exacerbated by Liz Truss’s disastrous mini-budget which spooked the markets and put the British economy in a tailspin.