The cost of both fixed rate and tracker rate mortgages are at their lowest since Moneyfacts.co.uk started to record rates back in 1988. Lenders have been unveiling ever better rates over the last few months in an effort to attract business.
As a result, the average two year fixed rate mortgage is now priced at 4.32%, while the average three year deal is at 4.92%. A five year fixed rate mortgage will set the borrower back an average of 5.29%, while the average two year tracker deal is priced at 3.37%.
Mortgage rates had been rising earlier in the year amidst fears that base rate might be about to increase. However, many experts now believe that the Bank of England will not start hiking rates until 2012, leaving lenders happier to lower the cost of their mortgages.
Things are also beginning to look up for first time buyers too, with the price of deals which require the smallest deposits also starting to fall.
Michelle Slade, spokesperson for Moneyfacts.co.uk, said:
"Lenders appear to be applying cuts equally across all loan-to-value tiers, which is good news for first time buyers, as previously cuts were only being applied to the lower LTV bands,"
"While rates may still fall slightly further, it is likely that some lenders will instead opt to make existing competitive deals available to borrowers with smaller deposits."
Homeowners have been warned not to wait too long before securing a mortgage deal, however, as rates will inevitably start to rise again once the markets sense the Bank of England is about to take action.
Michelle Slade adds:
"If borrowers delay too long to secure a new mortgage deal, they could find that they miss out on some of the lowest rates ever seen."
