The average interest rate on two- year tracker mortgages – that track some interest rate, typically the Bank of England’s base rate – dropped by 0.28 per cent to 2.38 per cent in the three months to November, according to figures from the Mortgage Advice Bureau (Mab).
The figure marks a post-2007 low and means two-year tracker rates have fallen by more than 0.5 per cent over the last year.
Average two year fixed rates dropped by 0.27 per cent to 3.44 per cent in the three months to November – the biggest Autumn price drop since 2008, according to the Mab.
Three-year fixed rates were also cut by 0.27 per cent, to a record low of 3.52 per cent.
Fixed-rate mortgages are the most popular choice for borrowers. However, with two-year tracker rates falling further than two-, three- or five-year fixed rates over the past year, there has been a slight shift in borrower behaviour.
Last month saw 92 per cent of homebuyers applying for fixed-rate mortgages compared with 94 per cent a year earlier.
Meanwhile, 87 per cent of remortgaging homeowners opted to fix compared with 93 per cent in November 2013.
Brian Murphy, head of lending at the Mortgage Advice Bureau, said: “Fierce competition between lenders has led to an all-out mortgage rate war, with two year fixed, two year tracker and three year fixed rates all at record lows.
“This is resulting in tangible monthly savings for consumers, particularly compared to this time last year.”
He continued: “There may be room for further discounts, but as we edge closer to an interest rate rise – currently expected in autumn 2015 – it’s likely that we will soon hit the bottom of the curve. Consumers playing the waiting game could therefore risk losing out on the most competitive deals.”