Prices had risen during July when the average cost peaked at 5.21% by the end of the month.

The financial information service suggested that competition was now increasing among home loan providers.

However, the cost for those homeowners looking to fix their repayments over a longer period has continued to rise.

“Swap rates have been falling over the last few weeks, but mortgage rates on medium-term deals are yet to follow suit,” said Michelle Slade of Moneyfacts.

“Borrowers will be hoping the easing of credit criteria continues and that lenders will start to reduce the large margin for risk they have been taking over the last year.”

She said that there were signs that the worst of the squeeze for mortgage borrowers could be over, after many potential owners – especially first-time buyers – found that they have had to offer a large deposit.

“Borrowers are finally starting to see more positive news coming out of the mortgage market,” she said.

“Lenders have become accustomed to the post banking-collapse world and appear to finally be relaxing their credit criteria.”

Separate research by price comparison website Moneysupermarket.com has found that people are still reverting to their lender’s standard variable rate (SVR) instead of remortgaging.

Consequently SVR rates have risen, and now stand at an average of 4.7%, according to the website’s figures.

“Borrowers need to be aware that lenders are free to price their SVR as they please,” said Hannah-Mercedes Skenfield, of Moneysupermarket.

The latest data on mortgage lending by the major banks will be published on Tuesday.