More than nine out of 10 opted for fixed-rate mortgages in September, spurred by record low rates on two and three-year fixes.
The average two-year fixed rate hit a low of 3.56% in September, down from 4.57% in the same month in 2012, according to the latest National Mortgage Index from the Mortgage Advice Bureau (MAB).
And the average three-year fix also hit a record low of 3.92%, down from 4.89% one year ago.
The average five-year fixed rate is even cheaper at 3.87%, down from 4.6% in September 2012.
On the average £158,517 mortgage, this equates to a £90 monthly saving on a two-year fix, an £89 saving on a three-year fix and a £66 saving on a five-year fix.
Unsurprisingly, fixed-rate mortgages have soared in popularity, with 93% of homebuyers choosing to fix, up from 86% in September 2012. Some 91% of people remortgaging chose a fix, compared to 83% one year ago.
There have already been more mortgage applications in the first nine months of this year than in the whole of 2012, with three in four products now available through brokers, according to the research, which uses data from more than 500 brokers and 800 estate agents.
The number of intermediary products increased by 2.6% to 7,979, while direct-only product numbers fell 15% to 2,766, the lowest in four months.
Housing market activity levels bounced back by 5% in September having dropped by 10% during the traditional lull between July and August. This made September the second busiest month of 2013 to date with 58% more applications than the same time last year.
Brian Murphy, head of lending at Mortgage Advice Bureau, said: “Variable rates briefly returned to favour when the Bank of England introduced its forward guidance, but lenders haven’t yet called time on the season of discounted fixed-rate products.
"Thanks partly to government support, affordable mortgages have now been in vogue for much of the year and the competition to win over the house-buying public should mean that conditions continue to improve in borrowers’ favour.
“It means Help to Buy 2 is coming on stream at a time when confidence and momentum have already resurfaced in the market. This is one reason why lenders are treading carefully with their opening offers under the mortgage guarantee, which are sure to improve as the scheme finds its feet during the remainder of this year and into 2014.
“Help to Buy will be a godsend both for aspiring first time buyers and first-time sellers who have been held back by a lack of savings or equity as well as mortgage finance.
"The good news is that homebuyers and movers won’t be left with a choice between Help to Buy or nothing – there are plenty of attractive offers with and without government support.”
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