Property, Mortgage & Insurance News from the Best Deal 4 U

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Mortgage rates 'at 2007 levels'

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Friday, August 22, 2008 09:21:28

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The average rate on a two-year fixed deal is now 6.59% - almost the same as 6.56% in August 2007 and down from 7.08% in early July.

However, the costs associated with mortgages remain high, Moneyfacts said.

The better rates are only available to those with big deposits and lenders are also charging higher fees.

Moneyfacts said that the average mortgage arrangement fee was now £964 compared with £803 in August 2007.

Furthermore, there is less competition in the marketplace, with only 3,748 products on offer compared with 13,027 in August 2007.

Borrowers are also required to put down much higher deposits than a year ago. An average of 20% is now the norm, Moneyfacts says.

Last summer 33 lenders were offering borrowers 100% mortgages compared with just two lenders in August this year.

Abbey, Nationwide and HBOS have been among the lenders that have been cutting their rates.

Lending to homeowners has slumped dramatically in 2008, because the credit crunch has dried up the supply of funds available to banks.