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The cost of the average five-year fixed rate mortgage has fallen sharply over the past year with many providers launching their lowest ever rates.

The average five-year fixed-rate mortgage is now priced at 3.45%, considerably cheaper than the average two-year fixed rate one year ago, which stood at 3.73%.

Charlotte Nelson, finance expert at Moneyfacts.co.uk, said: "In the space of one year borrowers can now secure a five-year fixed rate deal for the same price or lower than its two-year alternative."

The last year has even seen the first-ever sub-2% five-year fixed rate, launched in April by HSBC.

Nelson said: "Longer-term fixed rates provide borrowers with extra security, and to be able to secure a five-year fixed deal at two-year prices is unheard of.

"Borrowers coming to the end of their fixed deal or those who are currently sitting on their SVR should seriously consider opting for a new fixed rate now, as rates will inevitably go up at some point in the future."

Two-year fixed-rate mortgages have also continued to get cheaper, with the average deal charging 2.97% in May, down from 3.62% one year ago.

The Co-operative Bank offers a two-year fixed rate at 1.09% to 60% LTV, with a £1,499 fee.

The current cheapest five-year fix for a 40% deposit is 2.14% from Chelsea Building Society with a £1,499 fee. Both HSBC and Barclays have both withdrawn their five-year fixed rates at 1.99%.

This could be a sign that longer-term mortgage rates will start to increase, especially with swap rates rising in recent weeks.

Five-year swap rates were 1.48% in April but jumped to 1.73% last week. They have since retreated to 1.66%.

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