Average two-year mortgage deals have dropped below 6pc for the first time in almost nine weeks but borrowers still face spending around £10,000 more on home loans than last year.
The average two-year fixed-rate fell to 5.99pc on Monday, dipping below the 6pc threshold for the first time since 4 October, according to analyst Moneyfacts.
Sub-5pc loans have helped to lower the average, with several larger lenders such as Virgin Money, HSBC and Halifax offering lower-rate loans for those with large deposits, according to Adrian Anderson of Anderson Harris, a broker.
Principality, another lender, offers a 4.60pc two-year fixed rate with a £1,395 arrangement fee at 65pc LTV. Five-year fixes already fell below 6pc at the end of November and charge 5.78pc on average.
However, Moneyfacts found that even at improved rates, a two-year mortgage will cost about £10,000 more during than if the same product were issued last December, when rates were at around 2.34pc.
However, homeowners have been left with few options. Recent rises in the Bank of England base interest rate have increased standard variable rates, which borrowers are moved onto after their fixed or tracker mortgage deal comes to an end. Homeowners are therefore advised to take action, rather than let themselves fall onto SVRs.
David Hollingworth, of mortgage broker L&C, said: “The reductions in fixed rates offers those whose natural inclination is to put security into their mortgage payment the chance to do so at a more appealing rate and that shouldn’t stop them being able to review again if rates come down further.
“Taking some action is likely to be more cost effective than drifting onto standard variable rate where rates continue to feed base rate increases through to borrowers and many are around the 6.50pc with some in excess of 7pc”.