According to the latest research lenders seem to have launched a mini rate war with 12 leading lenders cutting their headline rates on two and three year fixed rate deals.
Halifax, the UK's largest mortgage lender, has led the way with cuts of 0.95%, bringing the cost of the cheapest two-year deal down to 4.89%. However, the deal comes with a maximum loan-to-value (LTV) ratio of 25% and a fee of 2.5%.
Lloyds TSB is also offering a rate below 5%. Following cuts of 0.50% over the last two weeks, the bank now has a deal at 4.99%, with a similar LTV a fee structure of Halifax.
Cuts of 0.20% and 0.25% respectively have seen Britannia and Abbey take rates on a two-year fixed-rate deal to 5.44% and 5.54%. However, Abbey has a maximum LTV of 70% on the cheapest deals.
'We are in the midst of a mortgage crisis, yet three quarters of the nation's biggest lenders have recently slashed rates on deals,' said Louise Cuming, head of mortgages at MoneySupermarket.com, which carried out the research.
'For such a significant proportion of mortgage providers to drop their rates underlines an industry wide recognition that rates were too high. This is good for borrowers who can take heart in some positive news, a rarity during the current credit crisis. I am also pleased see lenders making a real effort to make borrowing more affordable,' she added.
But many buyers are still finding it hard to get suitable finance. Those with second homes overseas are increasingly using them to raise the money they need.
Assetz Finance said it has seen a 50% increase in enquiries regarding cash-raising mortgages on European property since the start of the credit crunch. As a result it is now offering a holiday home remortgaging service.
Those using this kind of finance include people wanting to buy property in the UK but do not have the large deposits currently required. Others want to use the funds to help their children buy their first home, or even just raise funds to help them weather the effects of the credit crunch.
'European lenders are still doing business as normal and most have not tightened their lending criteria. They are in a position to continue lending whilst their UK and US counterparts are severely restricted, and British holiday home owners are beginning to take advantage of this opportunity,' said Katy Hepworth, Overseas Mortgage Manager at Assetz Finance.
