This was down from an average of 4.01% in August, following Leeds Building Society launching a two-year fix at just 1.99%.
However, Moneysupermarket.com highlighted that, while interest rates have dropped, the average fee for a fixed rate mortgage has increased by 6.40% since June.
It warned that a deal with a low interest rate could work out more expensive than a product with a slightly higher rate, because of the fees involved.
Clare Francis, mortgage spokesperson at Moneysupermarket.com (pictured), said that a buyer borrowing less than £164,350 would find the Leeds’ 1.99% deal with a fee of £1,999 – above the £1,253 average – more expensive than the Yorkshire Building Society’s two-year fix at 2.49%, because of its lower fee of £995.
Francis said: “Obviously, if you’re looking to borrow more than £164,350 and want to fix your mortgage payments for two years, the new Leeds deal does offer the best value over that term.
“When looking for a mortgage it is therefore vital to work out the total amount you’d repay over the term of the offer.”
