Two-year fixed-rate mortgage rates have fallen below 5% for the first time since June, thanks to increasing competition among lenders.

This has led financial information service Moneyfacts to speculate that the worst of the squeeze for mortgage borrowers may be over. The average interest on a two-year fixed deal now stands at 4.99%, after peaking at 5.21% at the end of July.

It also found, however, that other rates have continued to rise: borrowers hoping to fix their repayments over a longer period will still have to pay more. The average three-year fixed rate mortgage has increased over the last few months, and now stands at 5.58%, while the margin on the average five-year fixed rate mortgage has increased to the widest on record.

"Swap rates have been falling over the last few weeks, but mortgage rates on medium-term deals are yet to follow suit," said Michelle Slade of Moneyfacts.

"Borrowers will be hoping the easing of credit criteria continues and that lenders will start to reduce the large margin for risk they have been taking over the last year."

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