Mortgage rates at 7-year low

The average rate on two year fixed rate mortgages has fallen to 4.52%, its lowest level since September 2003, when the average stood at 4.51%.

Fixed mortgage rates have been falling since September 2009 as lenders try and tempt borrowers off record low standard variable rates (SVR).

Michelle Slade, spokesperson for Moneyfacts.co.uk commented: "Many borrowers are opting to remain on record low SVRs and overpaying their mortgage rather than secure a new deal at a higher rate.

"Lenders are trying to incentivise borrowers onto new fixed rate deals by making significant cuts to rates.

"A fifth of lenders have moved to increase their SVR since bank rate was kept on hold after finding their previous level unsustainable.

"Competition for a limited amount of mortgage business continues to increase amongst lenders, who are once again actively competing to be top of best buy tables.

"Previously, only deals for borrowers with large deposits were seeing cuts, but as the market improves borrowers with smaller deposits are being offered more competitive deals.

"The platform has been set for the mortgage market to return to some sort of normality, while still applying the lessons learnt over the last few years.