The average two-year fixed rate mortgage rate has fallen, according to Moneyfacts.co.uk.

The average rate as of 8 th December 2009 was 4.86%, with average two-year rates falling below 5% for the first time since June 2009 at the beginning of the month.

Michelle Slade, spokesperson for Moneyfacts.co.uk, said: “Margins on fixed rate mortgage deals have steadily increased in the last year as lenders looked to repair damaged balance sheets.

“Following their peak in October 2009, mortgage margins on the popular two year fixed deals have fallen steadily, now standing at the lowest level since August 2009. The number of two year fixed deals paying below 4.00% has increased by from 53 to 94 in last two months and now accounts for a quarter of all two year fixed deals on the market.”

Lenders who have cut fixed rates include Abbey cut selected rates by -0.2%; Accord Mortgages cut rates by -0.4%; Alliance & Leicester reduced selected rates by up to -0.25%; Cheltenham & Gloucester cut selected rates by -0.1%; First Direct reduced selected rates by -0.05%; Leeds BS reduced selected rates by -0.26%; Post Office reduced rates by up to -1.3%; Scottish Widows Bank reduced rates by up to -0.4% and Yorkshire BS reduced rates by up to -0.3%.