Average mortgage rates have fallen to lows not seen for over 12 years, since electronic records began in 2007, said Moneyfacts.

The financial information provider said that the average overall two-year fixed rate now sits at just 2.09%, and the average rate for five-year fixed mortgages has reached a new low of 2.35%.

It worked out that, if borrowers with 25% equity in their home and a £150,000 balance outstanding on their 30-year term mortgage were to switch to a new two-year fixed rate deal, they could potentially save £212.31 per month.

Those looking to protect themselves from future interest rate volatility opting for a five-year fixed rate deal for the same terms could save £194.94 monthly or £2,339.28 over the first year.

Restricted choice

However, Moneyfacts also noted that the Covid-19 pandemic has had a significant impact on the choice of deals available across the mortgage market over the past two months. The number of available products has more than halved when compared to the beginning of March, falling from 5,222 deals available to just 2,566 at the start of May.

Eleanor Williams, finance expert at Moneyfacts, said: “This recent fall in product numbers can in part be attributed to lenders initially needing to focus on supporting their existing customers and managing the volume of mortgage payment holiday requests rather than looking to take on further new business.

“It is also likely that this fall is as a result of Government guidance around delaying house purchasing and the social distancing measures in place effecting the ability of surveyors to provide valuations, and indeed on estate agents and potential buyers alike having difficulty in attending viewings.

“What is also evident from our data is that product choice for borrowers requiring higher LTV deals has plummeted for both two and five-year fixed rates.

“Looking at products often favoured by first-time buyers; at 90% LTV, the number of products available has dropped by 270 and 243 for two and five-year fixed rate options respectively. At 95% LTV, the product count has dropped by 126 and 131 respectively, leaving only 22 two and five-year fixed rate deals available in total to new borrowers.”