The Bank also decided not to extend its quantitative easing (QE) stimulus programme, which has injected £375bn into the UK financial system.
Sean Oldfield, chief executive officer at Castle Trust, said: “The outbreak of the first mortgage market price war since the start of the credit crisis with 1.99% fixed rate deals – down by a third in a few months - indicates that Funding for Lending is having a real effect on the market with building societies in particular competing for business.
“The main winners so far have been customers looking to remortgage with the best deals on offer to those with bigger deposits.”
