The lowest fixed-rate mortgage deal has fallen below four percent for the first time since April, new research shows.

Data from Moneyfactscomare shows the lowest rate for a five-year fixed rate deal at 60 percent loan-to-value (LTV) dropped to 3.99 percent today, down from 4.45 percent at the start of July.

Meanwhile, two-year deals are plateauing, with the lowest rate remaining at 4.33 percent month-on-month since May.

This could indicate a potential easing in mortgage costs, possibly reflecting market expectations of a future rate cut from the Bank of England.

Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “Fixed mortgage rates are on the downward trend, which will be a relief to borrowers looking to refinance.

“There is still much more room for improvement, but it has taken a few months for the lowest fixed mortgage rates to drop below the four percent mark.

“However, as it stands five-year fixed mortgages are lower than a two-year equivalent, so any borrowers unsure on which to choose would be wise to seek advice to go through their options.”

Mortgage rates have been volatile since the start of 2024 but in the past few weeks, lenders have been reacting to changing swap rates.

Subsequently, Ms Springall noted that mortgage rates “could fall further”, but it is difficult to tell how quickly and by what margins.

Typically, she said: “A brand with a large presence in the market that cuts rates can encourage other lenders to review their rates to compete.

“So, as the lowest five-year rates have edged closer to four percent from some of the biggest high street brands (Halifax, Lloyds Bank, Barclays Mortgage, NatWest), the market did appear on course to reveal a sub-four percent deal.”

Most recently, Nationwide Building Society’s mortgage lender the Mortgage Works, reduced interest rates on select products, with rates starting from 3.54 percent.

Ms Springall continued: “Borrowers sitting on the fence may remain patient for a little while longer.

“However, on the flip side, those who feel this might now be their chance could see if they can lock into a deal early, as some lenders will let borrowers do this from three to six months in advance.

“Those waiting for the Bank of England to cut base rate may be crossing their fingers for August, but this has split opinions among economists who are now pointing towards September at the earliest due to stubborn service inflation.”