The average two-year fixed rate at 95% loan-to-value (LTV) is now 5.41%, according to data from Moneyfactscompare.co.uk.

That is the cheapest it has been since September 2022 when it was 4.51%, just before the Liz Truss mini-Budget sent mortgage rates soaring.

The average two-year fixed deal at 90% LTV has fallen to 5.24%, which is also the lowest it has been since September 2022 when it was 4.27% just before rates surged.

Two-year fixed rates have seen sharper falls over the past month and the over the past year than five-year deals.

The average two-year fixed rate across all LTVs has come down by 4bps compared to last month and by 45bps compared to this time last year to 4.94%.

The average five-year fixed has dipped by 1bp since last month and by 8bps since November last year to 5.01%.

The average Standard Variable Rate (SVR) remained unchanged month-on-month in November at 7.27%. 

The highest recorded average SVR was 8.19% during November and December 2023.

Product choice overall fell month-on-month, to 6,918 options.

The availability of deals at 95% loan-to-value tiers rose to 465 options, the highest count since March 2008.

Moneyfacts finance expert Rachel Springall says that, while borrowers with small deposits will be thrilled to see costs fall, uncertainty around the upcoming Budget is causing many buyers to adopt a “wait-and-see approach”.

She says: “So far, the rumour mill has spun out a variety of ideas which could impact borrowers from different ends of the market. 

“On one hand, the idea to abolish Stamp Duty Land Tax (SDLT) and an introduction of a new way of taxing could work in favour of first-time buyers, saving them thousands of pounds upfront, helping them get that crucial first step on the property ladder. 

“However, like a double-edged sword, creating a new property tax that puts the burden on sellers could lead to homeowners refusing to move, hitting supply. 

“Supply could worsen if capital gains tax exemption on primary residences is removed and if the yearly tax levy dubbed the ‘mansion tax’ becomes a reality.”

National Association of Estate Agents Propertymark president Mary-Lou Press agrees that the fall in mortgage rates are welcome, the wider affordable housing shortage needs to be addressed as a priority.

She says: “While lower monthly payments can help more people access finance, the fundamental issue of a lack of housing supply remains. 

“Without a meaningful increase in the number of affordable homes for sale, more tailored mortgage deals alone will not solve the wider problems within the housing market.

“It would be a welcome to see the UK government use the upcoming Budget to deliver policies that stimulate housing supply across all tenures, support sustainable lending, and give consumers confidence to move. 

“Measures that boost homebuilding and maintain a balanced, stable property market will ensure that falling mortgage costs translate into real opportunities for households, rather than further upward pressure on prices.”