The average two year fixed rate mortgage is cheaper than it has been for seven years.

According to market analysis from Moneyfacts.co.uk, the average two year fixed rate mortgage now stands at 4.52 per cent, the lowest it has been since September 2003, when it stood at 4.51 per cent.

Other fixed rates have also become cheaper, including three and five year fixes, which – at 4.16 and 5.61 per cent – are at their lowest since May 2009 and June 2009, respectively.

In an attempt to encourage the hoards of borrowers who are staying on a standard variable rate and taking the opportunity to overpay on their mortgage until the market improves, lenders have been gradually cutting the cost of fixed rate mortgages.

But, borrowers might do well to seek out the security of a fixed rate, suggests Michelle Slade, spokesperson for Moneyfacts.co.uk, because a fifth of lenders have increased their standard variable rates since the Bank of England base rate remained on hold and lenders found the previous low SVRs unsustainable.

Competition is also helping to make fixed rate mortgages seem more attractive, she explained, due to the low level of business.

Part of the campaign to attract more business has included reducing the deposit required, as more lenders have started offering higher loan to value mortgages.

“Previously, only deals for borrowers with large deposits were seeing cuts, but as the market improves borrowers with smaller deposits are being offered more competitive deals,” said Ms Slade.

“The platform has been set for the mortgage market to return to some sort of normality, while still applying the lessons learnt over the last few years.”

© Fair Investment Company Ltd