The cost of mortgages continued to fall throughout September for homeowners who had large deposits, latest figures have shown.

The average cost of a two-year fixed-rate mortgage for someone borrowing 75% of their home's value fell to its lowest level since March, dropping from 6.08% to 5.93%, according to the Bank of England.

Five-year fixed-rate deals for people with a 25% deposit dropped by 0.25% to a six-month low of 5.84%, while tracker deals for this loan-to-value (LTV) ratio dropped by 0.6% to average 6.14%.

But the news was less encouraging for people with 5% deposits, as the cost of five-year fixed-rate deals for these borrowers remained the same.

For the fifth consecutive month, there was an insufficient amount of two-year fixed-rate mortgages for a 95% LTV to be included in the figures.

Financial information group Moneyfacts.co.uk said there were now just 43 different fixed-rate mortgages for people with only a 5% deposit and 18 discount or variable ones. This is a drop from 1,079 in July last year, before the credit crunch first struck.

Mortgage rates continued to slide during most of September, pushing the average cost of a two-year fixed-rate deal back to its pre-credit crunch level.

But towards the end of the month, lenders began to hike their rates again in response to jumps in wholesale funding costs due to the latest round of global financial turmoil.

This trend could be reversed by Wednesday's 0.5% cut in the Bank of England base rate to 4.5%.

Some lenders have so far pledged to pass on the reduction in full, including Britain's biggest mortgage lender Halifax, Lloyds TSB and Cheltenham & Gloucester, Barclays' mortgage arm the Woolwich and NatWest and Royal Bank of Scotland.

But despite the cut in the official cost of borrowing, and a raft of Government measures to help the troubled banking sector, there have been continued rises in key interbank lending rates.

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