Buyers are now paying the lowest price for an average two year fixed rate since the summer with the average rate falling to 4.99%, the first time it has been below 5% since June 2009.

Rate rises during July saw the average rate quickly rise and reach 5.21% but the reduction in rates has taken nearly four months to achieve.

Michelle Slade, spokesperson for Moneyfacts, said borrowers are finally starting to see more positive news coming out of the mortgage market.

She added: “Falling rates on popular two year fixed rate mortgages, occurring against a backdrop of lenders raising the maximum LTV on their most competitive deals suggests that competition is increasing. Lenders have become accustomed to the post banking collapse world and appear to finally be relaxing their credit criteria while remaining within a regulated frame work. While it may still be too early to say the worst is over, the signs are all there.”

However, Moneyfacts also pointed out that the average three year fixed rate mortgage has increased over the last few months and now stands at 5.58%. The margin on the average five year fixed rate mortgage has also increased.

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