This is despite markets betting on the Bank of England holding the Bank Rate at 5.25pc on Thursday.
Simon Gammon, of broker Knight Frank Finance, forecasts further cuts of up to 0.40 percentage points as lenders seek to “stimulate” the market.
He said: “Lenders want to reprice and stimulate activity. They want to lend. Margins are tight at the minute, so the more business they can generate the better this is for them and the property market.
“Banks are always looking proactively at prices. They don’t need to wait for the Bank Rate to drop. They base their decisions on market expectations of what’s going to happen, which tends to come ahead of Bank Rate drops.
“Today’s news is better than expected and will really help the market.”
Richard Harrison, mortgages head at Atom Bank, said Wednesday’s fall in inflation has “increased expectations of lower mortgage rates”.
He also said Wednesday’s figures from the Office for National Statistics, showing house prices fell by just 0.6pc in the twelve months to January, point to the fact house price falls are “starting to slow”.
Markets expect the Bank Rate to start coming down from August, having previously bet on June. While headline inflation has fallen, service-sector and wage inflation – two measures Bank Rate cuts are based on – remain elevated.
Some experts are wary of calling meaningful mortgage rate cuts just yet. Dr Dean Buckner, formerly of the Bank of England, said strong wage pressures are keeping prices high.
He added: “Corporates are trying to keep prices down. They want to get products to market at competitive prices. If wage pressures increase, inflation could start bursting out again.
“Back in 1964, the Fed thought it had won the war against inflation – then it shot back up again. Inflation is like a wild beast.”
