Joint Bank of England and Financial Conduct Authority (FCA) figures showed fixed rates fell by 20bps to 2.91%, with variable rates dropping by 8bps to 2.5% in the second quarter, compared to quarter one of this year.
The overall average interest rate on total amounts outstanding decreased by 5bps to 3.17% in Q2 2015, the lowest since the series began in 2007.
The figures also showed mortgage gross advances were up 15.1% quarter-on-quarter this year.
Mortgage lending increased from £47.2bn in Q1 to £59.3bn in Q2, an 11% increase on 2014, of which 79% were fixed rate loans, an increase of 1% since the first quarter.
First-time buyers borrowed £10.8bn, an increase from £8.9bn last quarter, but falling from figures recorded in Q2 2014. Meanwhile, buy-to-let lending rose from £7bn in 2014 to £8.3bn in Q2 2015.
Arrears were 5.5% lower than in Q1 2015 and was the lowest since the series began in 2007.
Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), said the second quarter of 2015 saw a significant boost in mortgage activity.
“At the same time, average mortgage rates fell to the lowest level seen since the MLAR [Mortgage Lenders and Administrators Statistics] series began in 2007. This improved affordability has caused a rush of demand from borrowers, and lenders are locked in fierce competition to win their business.”
However, he said those with significant deposits continue to reap the greatest benefits.
“Only 3.5% of gross advances were above a 90% loan-to-value (LTV) in Q2. With house prices continuing to rise, improved availability of higher LTV products is sorely needed. Otherwise, lower income borrowers face being barred from the property ladder altogether because of unrealistic deposit requirements,” said Murphy.
