NATIONALISED North-East bank Northern Rock today cut its mortgage rates for the fourth time in just over a month.

The group is slashing rates on 13 of its fixed rate and tracker products, reducing them by up to 0.5 per cent, while it is also launching four new deals.

It was joined by Britain's biggest building society Nationwide, which is cutting the cost of 19 of its mortgages, reducing fixed rate loans by up to 0.31 per cent and tracker ones by up to 0.2 per cent.

The latest round of cuts, which comes after a flurry of lenders reduced their rates during October, is a further sign that competition is returning to the mortgage market.

Darren Cook, of financial information group Moneyfacts.co.uk, said: "Over the last couple of months providers have become much more competitive on the loan to value front.

"When the bank rate was last changed in March there were 169 mortgages at 85% LTV, now there are 231.

"These latest changes suggest there is competition coming back on the rate front as well."

Ray Boulger, senior technical manager at John Charcol, said: "Despite significant increases in swap rates, both fixed and tracker mortgage rates have fallen during the last month.

"Prior to the credit crunch increases in wholesale rates on this scale would certainly have resulted in the cost of fixed rate mortgages rising.

"The two reasons why they have not are that savings rates are now funding much more mortgage lending and there is undoubtedly increased competition in the market."

Among the cuts being made by Northern Rock today is a 0.1 per cent reduction to its two-year tracker for people borrowing up to 70 per cent of their homes value who pay a £595 fee.

The new rate of 2.59 per cent puts it at the top of the best buy tables for two-year variable rate deals.

Northern Rock also announced it was launching a range of tracker products for people looking to borrow up to 80 per cent of their homes value.

The Government-owned group has to operate its mortgage range within the constraints of its self-imposed competitive framework, under which it is limited to writing 2.5 per cent of new mortgage lending.

Last week European officials approved Government plans to split Northern Rock into a good and bad bank, with the good bank sold back to the private sector.

When this happens the group will be restricted from offering rates that appear in the top three slots of Moneyfacts best buy tables for fixed rate and tracker deals.

The group said yesterday that it had lent £1bn in the three months to September and £2.3bn for the year so far.

It originally planned to lend £5bn this year but will now not hit this target. It hopes to meet its £9bn commitment next year.