Falling mortgage rates and the launch of a new lending venture brought a glimmer of hope to hard-pressed borrowers this week.

Falling mortgage rates and the launch of a new lending venture brought a glimmer of hope to hard-pressed borrowers this week.

Britannia building society yesterday cut the rate of its two, three and five-year fixed-rate mortgages by up to 0.35%. Its two-year fix with a 90% LTV and an arrangement fee of £499 is now 6.99%.

This week alone Coventry reduced its offset rates by up to 0.3%, Woolwich cut buy-to-let mortgages by up to 0.5%, Lloyds TSB and Cheltenham & Gloucester (C&G) cut a number of their mortgage rates by up to 0.38%, and Accord Mortgages, intermediary lender of Yorkshire Building Society, announced the launch a 5.49% two-year fix.

Accord's product, though, has a maximum 60% LTV and a fee of 2.5%. "While the fee is comparatively high, this can be added to the loan," said the firm's director Cate Hillis. "This product isn't for everyone, and we have a broad range of low-fee and no-fee options."

Woolwich's cuts follow on from new fixed and tracker residential mortgage rates launched last week. "We've been able to make these reductions thanks to solid improvements in swap rates (the borrowing rates between institutions)," said head of mortgages Andy Gray.

On Monday, Legal & General Mortgage Club launches a two-year tracker at 5.99%, provided by Scottish Widows Bank, though with a massive £999 arrangement fee and with the current market's typical ceiling of 75% loan-to-value (LTV).

With several lenders trimming rates in recent weeks, the average two-year fixed rate has dropped to 6.95%. Halifax, C&G, Abbey, Nationwide and HSBC, which together supply the majority of mortgages, have a collective average two-year fixed rate of 6.76%.

"There is a faint glimmer of hope the fixed-rate mortgage market is returning to some sort of normality," said Moneyfacts' mortgage expert Darren Cook. "New borrowers are finally benefiting as lenders pass on a string of interest rate cuts on their popular fixed-rate deals."

Moneyfacts' barometer of two-year fixed rates over the past few months shows the average peaked three weeks ago at 7.08%, the highest in over a decade. Swap rates peaked at 6.52% seven weeks ago, reflecting the time-lag for swap rates to reach the mortgage market. Cook added: "Competition is finally returning to the fixed-rate market, which will benefit the borrower."

Two-year swap rates are continuing to fall and hit 5.74% this week, the lowest since mid-May, when the overall average two-year fixed rate was 6.63%. "If these downward trends continue, we will see further fixed-rate cuts by high-street lenders in weeks to come," Cook said.

The proportion of fixed-rate mortgages with terms over 10 years has almost doubled in the last 12 months, according to MoneyExpert.com. Deals of 10 years or more have risen from 8% of available fixed products in July last year to 15%. The number of 25-year products has risen from nine to 18.

"The credit crunch has prompted a flight to safety by borrowers stung by dramatic rises in rates on short-term deals," said MoneyExpert's Sean Gardner. "Long-term fixed-rate mortgages, with competitive rates of interest, in some circumstances may be worth considering. However, early redemption charges tend to be more substantial than on shorter fixed terms.

"A rate of 6.5% could prove a worthwhile long-term strategy if you don't mind accepting that at some point you're likely to be paying over the odds. Interest rates will eventually go down."

By then a new mortgage lender is expected to be in the market. Checkmate Mortgages last week announced it has obtained sufficient investment to launch early next year. "It is a vote of confidence in the property and mortgage market", said Ray Boulger, senior technical manager at mortgage adviser John Charcol.

"With bank rate likely to be falling again by early next year and additional mortgage funding coming into the market from private equity investment, there are good grounds for thinking house prices will bottom out in the first half of next year."