22.08.08 by Andrew Montlake

Mortgage Rates Back Where They Were A Year Ago

According to the latest reports from Moneyfacts mortgage rates are pretty much back where they were a year ago just before the credit crunch hit.

They state that the average rate on a two-year fixed deal is now 6.59% - almost the same as 6.56% in August 2007.

In fact you can now get tracker rates at 5.54% and fixes at 5.80% with reasonable fees. And today HBOS and Nationwide have announced further cuts and improvements to their mortgage products which is more good news.

The main differences, however, are in the product types available and the fees that go with them. Moneyfacts said that the average mortgage arrangement fee was now £964 compared with £803 in August 2007. Showing that there is now less competition in the market there are now only 3,748 products on offer compared with 13,027 in August 2007.

It is interesting to note, however, that they estimate that banks are actually making better margins on mortgage lending now than a year ago as the base rate is lower, with potentially more cuts to come.

Although inflation is set to reach 5% in the not too distant future, we are now seeing the weakest set of data on the UK economy as a whole since 1992. George Buckley, an economist at Deutsche Bank said, "The figures are very weak and suggest the UK economy is already in recession".

This data serves to fuel speculation that a cut in rates may be round the corner, although there are likely to be some big arguments round the Bank of England Monetary Policy Committee table if recent voting is anything to go by. There does seem to be a massive difference of opinions at present.

Anyway, it is Bank holiday weekend so a nice chance to forget about the markets, enjoy the closing stages of the Olympics and relax in the sunshine.

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