But experts warn borrowers should not hang around as swap rates have already begun to rise.
The cost of the average two-year fixed rate 60 per cent loan to value (LTV) mortgage was 1.15 per cent last month, driven down by a host of sub one per cent deals released to the market in June.
Among the headline-grabbing rates is a 0.99 per cent two-year fix from HSBC and a 0.94 per cent remortgage deal from TSB.
June’s lowest ever average rate means a mortgage borrower with a 40 per cent deposit and a £250,000 mortgage taken over 25 years would pay £959 a month.
Meanwhile, rates in the upper LTV tiers of 90 and 95 per cent have fallen to around a 12-month low.
Borrowers with a 10 per cent deposit were able to secure an average two-year fixed rate of 3.09 per cent. This is down from 3.32 per cent in May and 3.38 per cent in April.
To find a 90 per cent LTV deal priced cheaper than June’s average two-year fixed you would need to look back to August 2020 when rates were 2.78 per cent.
At 95 per cent, average two-year fixes fell to 3.75 per cent from 3.85 per cent in May and 3.98 per cent in April. July 2020 was the last time rates in this band had fallen to a lower point, when five per cent deposit deals were on average priced at 2.58 per cent.
Alex Maddox (pictured), capital markets and digital director at Kensington Mortgages, said: “Two-year swap rates have started to increase, so if mortgage lenders are hedging their loans, which most do, then they will be locking in a higher cost of funds compared to a few months ago. Mortgage rates at low LTVs will likely not go much lower and may even increase.
“For higher LTVs, the rate is driven as much by a view on credit risk as the swap rate. As the economy recovers, we may see the risk premium reduce but there could also be increased inflation which will push up swap rates and offset any benefit from a better macro outlook.”
