Two-year fixes sink to pre-credit crunch levels

The average two-year fixed rate has dropped to the same level seen prior to the credit crunch, says Moneyfacts.co.uk.

The consumer finance site says that the average two-year deal has fallen to 6.39%, from a peak of 7.08% at the beginning of July.

Michelle Slade, analyst at Moneyfacts.co.uk, says:“The cost to lenders in obtaining the funds for mortgages on the money markets has dropped significantly in the last few months and we are now seeing some relief for borrowers who are looking for a new deal.”

“The increase in borrowers monthly repayments should not be as much as it would have been had they remortgaged two months ago, which will hopefully mean more borrowers can afford to remain in their homes.”

But she adds: “I doubt we will see rates being cut to levels similar to when base rate was last at 5%, but we should hopefully see further cuts from the big lenders in the coming months. Only time will tell if we have finally turned a corner, but this is the most prolonged period of cuts we have seen since the credit crunch began.”