The average two-year fixed has risen to 2.49% in October 2018 from 2.21% in the same period last year, but has fallen against its peak in August of 2.53%.
The average three-year fixed rate mortgage has increased to 2.72% from 2.49% in October 2017, whilst five-year fixed products stand at 2.91%, up from 2.76%.
Finance expert at Moneyfacts.co.uk, Charlotte Nelson, said October 2017 will be known as the month of the lowest fixed mortgage rates on record and as the turning point in the market.
She added: “The past year has been a challenging time for providers as they have had to wrestle with two base rate rises for the first time in years, while at the same time needing to remain competitive to protect their mortgage book.
“This conflict of interest has meant average fixed mortgage rates have not followed the Bank of England’s rate rises entirely. Despite this, borrowers opting for a two-year fixed rate mortgage today would still be £27.93 per month or £335.16 per year worse off compared to those who were lucky enough to lock into a fixed deal a year ago.
“Since the August rate rise, many would have expected rates to increase further, but instead they are actually falling. The reduction of average 95% loan-to-value rates reported last week has some element to play in the overall averages decreasing. However, providers know that many borrowers are starting to think about protecting themselves from future rate rises, and a fixed mortgage does just that.
“Therefore, lenders are trying to remain competitive, wanting to be seen as offering some of the lowest rates in the market. With the summer now over, providers may also be starting to look at end of year targets, and are perhaps readjusting their rates to meet them.
“However, while rates may be falling now, it is unlikely that the record low levels seen in October 2017 will return anytime soon. With multiple base rate rises predicted for the foreseeable future, it is likely rates will only get higher, so borrowers looking for a fixed deal should act fast to avoid disappointment.”