Mortgage rates at a seven-year low

The average cost of a two-year fixed rate mortgage has fallen to its lowest level for nearly seven years, according to Moneyfacts.co.uk. The financial information group said that interest rates charged on two-year fixed rate deals have been falling steadily since August last year, dropping to an average of 4.52 per cent. The rate is the lowest since September 2003, and down from 4.93 per cent at the beginning of the year.

The cost of five-year fixed rate deals has also improved during the past year, falling from an average of 5.57 per cent in June 2009 to 5.61 per cent now. There has also been a steady improvement in product availability, with the number of different residential mortgages available rising from 1,601 at the start of the year to 2,635 now. The biggest increase has been seen for people with deposits of only 15 or 20 per cent. There are now 482 different mortgages for people borrowing 85 per cent of their home's value, up from 254 at the end of December.