The housing market is bouncing back as a mortgage price war boosts sales, new data shows.

Newly agreed sales reached the highest level since March 2022 in December, according to the Royal Institution of Chartered Surveyors (Rics).

Buyer inquiries also recovered for the fourth month in a row with demand now at its highest level since April 2022 when higher interest rates and the cost of living crisis first started to hit buyer demand.

The uptick in activity came after lenders began cutting mortgage rates more aggressively at the end of last year, as markets bet on imminent interest rate cuts from the Bank of England.

By the end of December, the average rate on a two-year fixed rate mortgage was 5.94pc, down nearly a whole percentage point from the peak reached over the summer.

Lenders have slashed mortgage rates even further so far this year, with deals now available below 4pc from high street lenders.

Tarrant Parsons, Rics senior economist, said: “Supported by an easing in mortgage interest rates of late, buyer demand has now stabilised, and this is expected to translate into a slight recovery in residential sales volumes over the coming months.”

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