Average two-year fixed deals fall below 7%

THE average cost of a two- year fixed rate mortgage has fallen to 6.95 per cent from a decade high of 7.08 per cent less than a month ago.

A drop in wholesale funding costs, on which fixed rates are based, allowed several lenders to cut their rates in the last three weeks in July.

HSBC this week trimmed its two-year fixed deal by 0.31 per cent and reduced booking fees on fixed rate mortgages by £200 to £599.

Abbey, which this week was confirmed as the UK's biggest lender of new mortgages, yesterday cut its two and three-year fixed rate and tracker deals by up to 0.15 per cent.