A new mortgage war has erupted in recent weeks.

Nationwide Building Society, Santander, HSBC, Halifax, Yorkshire Building Society and Tesco Bank are among a wave of lenders to have revamped their ranges.

Nationwide, for example, cut the rates on selected two and five-year fixed and two-year tracker mortgages by up to 0.1 per cent in ASpril while Tesco Bank reduced the rates on a selection of its two and five-year fixed rate mortgages to as little as 1.78 per cent at the beginning of this month.

Others have put fresh incentives on their products, with Clydesdale and Yorkshire Banks not only lowering some rates but offering £750 cashback to customers who are buying a property, remortgaging from another lender or releasing equity.

Similarly, Halifax is offering £1,000 cashback to first-time buyers and homeowners.

On the face of it banks vying for business can only be good for consumers, but what is driving the new mortgage price war?

According to the banks they are doing it to offer customers a helping hand.

Helen Page, group innovation and marketing director at Clydesdale and Yorkshire Banks, said: “We understand that buying a property requires a significant upfront outlay. That’s why we’re offering customers a £750 cash back payment, to help them retain some cash flow and manage some of the other costs involved with setting up a home.”

Meanwhile, Richard Washington, mortgages director at Halifax, added: “Taking your first step onto the property ladder and moving house are big life milestones. The costs involved can also be significant, during what can often be a stressful time.

“Our latest offer aims to be there when first-time buyers and homemovers need us, providing a boost to bank balances during what can be an expensive period. This should mean that borrowers can focus on celebrating moving into their new properties and making them a home.”

However, David Hollingworth, a mortgage expert at L&C Mortgages, said that in general bigger lenders, which are being faced with increasing competition from smaller lenders offering attractive rates, are sprucing up their ranges to maintain their market position.

"Lenders are scrapping it out to attract business, whether it's from those buying their first home, moving house or looking to switch to a better deal," he said.

"More lenders fighting for business means that they need to stand out from the crowd and truly differentiate themselves.

"This, coupled with some easing in cost of funds, is forcing lenders to offer rates that demand attention. As a result, lenders are squeezing whatever they can out of their deals and offering more and more eye-catching rates."

While some lenders offer their best rates for a limited time only, Mr Hollingworth said there is nothing to suggest an end is in sight to the "very, very healthy" competition that is being seen on the market.

Indeed, Rachel Springall, a finance expert at financial website Moneyfacts, said some rates could be shaved lower still by lenders if they need to meet specific targets to draw in new customers.

So how can homeowners make the most of what is on offer and choose the right deal?

Springall says concentrating on the mortgage rate alone may not be the wisest way to navigate the mortgage maze.

"Interest rates are important but so is the incentive package and any fees that are chargeable," she said.

"Some of the lowest-rate deals carry the highest product fees and have little to no incentives, but other deals with slightly higher rates could be fee-free, with a free valuation, and offer free legal fees, which can be much more cost effective.

"It's worth remembering that this is just the cost of the mortgage itself; if moving, there will be other costs to pay, such as removal costs."

Some borrowers may want to lock into fixed-rate mortgage deals to give themselves certainty while others may want more flexibility.

Low mortgage rates also give borrowers who can afford it the opportunity to make overpayments and perhaps clear their mortgages earlier, Springall added.