Mortgage rates have seen their most significant weekly fall since the beginning of the year, with a number of mortgage lenders cutting the cost of borrowing this week.

Analysis from Moneyfacts.co.uk has found that the influx of mortgage rate cuts have brought the average two year fixed rate mortgage to 4.86 per cent – last week it fell below the five per cent mark for the first time since June.

This week’s fall in mortgage rates is the biggest since the Bank of England cut the base rate by 0.5 per cent to 1.50 per cent in January. The base rate was cut to 0.5 per cent in the following months where it has stayed since March.

But, while mortgage lenders have cut the cost of borrowing, they have not been stringent at reflecting the falls in the base rate and subsequently their mortgage rates have fluctuated throughout the year.

Some of the mortgage lenders to cut their cost of borrowing this week include Abbey, which cut some products by 0.20 per cent, the Post Office, which slashed up to 1.30 per cent off some of its deals, and Yorkshire Bank, which reduced some of its rates by up to 0.30 per cent.

Michelle Slade, spokesperson for Moneyfacts.co.uk commented: “Lenders finally appear to be putting the ‘open for business’ sign back in the window and bringing competition back to the mortgage market.

“Margins on fixed rate mortgage deals have steadily increased in the last year as lenders looked to repair damaged balance sheets.”

Ms Slade suspects borrowers will be hoping that the mortgage rate cuts are not just for Christmas but that they hang around into the new year.

© Fair Investment Company Ltd