The figures show that the average two-year fixed rate mortgage (for someone borrowing 75% of the property value) available to borrowers in February was 2.87%, down from 3.06% in January and 3.69% in August last year.
The average cost of a five-year fixed rate (also to 75% LTV) is now 3.58%, down from 3.65% in January and 4.11% in August last year.
The improving mortgage market has been credited with helping house sales rise to a two-and-a-half year high according to the Royal Institute of Chartered Surveyors (RICS).
At L&C, we’ve seen a big surge in the uptake of fixed rates since the start of the year as customers look to lock in to low interest rates and protect themselves against potential future rate rises.
The number of L&C customers applying to remortgage has also risen since the end of 2012 and is now at its highest level since 2011, with more and more borrowers looking to switch and take advantage of the low mortgage rates currently on offer.
Of course not everyone is able to snap up the lowest rates that mortgage lenders are offering – many are reserved for people with big deposits of at least 30% or 40%. Borrowers with only 10% to put down are having to pay higher interest rates, but the market for them is also showing signs of improvment. The Bank of England figures show that the average cost of a two-year fixed rate at 90% LTV is now 4.58% - considerably lower than the average 5.93% available in August.