But borrowers are being warned to look closely at tempting headline rates as lenders are increasingly using upfront fees to make their deals profitable.
New analysis from online mortgage company mform.co.uk shows currently 24 of the 200 best deals, ranked on true cost which includes all fees, are priced at 5.75 per cent or lower while 63 of the best deals are priced at 5.99 per cent or lower.
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Movements in swap rates on the UK money markets, which has seen falls of around 15 basis points, means mortgage lenders can now borrow at lower rates to fund fixed-rate deals enabling them to offer eye-catching headline rates.
Yorkshire Building Society is offering a 4.99 per cent two-year deal which includes a two per cent fee based on the sum borrowed while others such as Nationwide and West Bromwich Building Society have cut fixed rates.
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Francis Ghiloni, Marketing and Business Development Director of mform.co.uk, said: Cheaper fixed rates are on the way which will be a relief to many and particularly those whose current fixed deals are coming to an end.
However lower headline rates do not necessarily mean lower costs for borrowers. Some of the low initial APRs are only made possible by high upfront fees. Borrowers need to focus on the true cost of their loan.
Many lenders are now offering loans where the fees are based on the size of the advance. Borrowers need to be rate smart when comparing mortgages.
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Cheltenham & Gloucester, for instance, offers a two-year fixed rate at 5.29 per cent and another at 6.33 per cent.
However when compared on true cost the 6.33 per cent deal is less expensive. Fees on it are only £99 for someone borrowing £150,000 while fees for the 5.29 per cent deal are £4,249 Monthly payments for the 5.29 per cent deal are £661.25 and £ 791.25for the 6.33 per cent deal.
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But the true cost over two years is £18,689 for the 6.33 per cent deal and £20,119 for the 5.29 per cent offer.
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