Mortgage costs 'falling'

Posted: 26 Aug 2008 09:51:26 GMT

Home buyers will be pleased to learn that the average cost of a UK mortgage has fallen back to the same level as in August 2007, before the credit crunch.

This follows further cuts on fixed-rate products from a number of providers, including Royal Bank of Scotland, Abbey and Britannia Building Society.

According to research from MoneyFacts.co.uk, the average rate on a two-year fixed mortgage is now 6.59 per cent, down from 7.08 per cent at the beginning of July and close to the 6.56 per cent recorded 12 months ago.

The independent consumer advisory website warned, however, that the fall in mortgage rates is partially due to rising fees, which now stand at £964 on average - up from £803 in August 2007.

"Over time the mortgage market should continue to improve from its current position," said Michelle Slade, an analyst at MoneyFacts.co.uk.

"The number of products will steadily increase and rates will lower with increased competition between lenders."

Landlords are also beginning to see the benefits of greater competition in the buy-to-let mortgage market, with provider The Mortgage Works having just recently launched a new range of products starting from as little as 5.09 per cent.


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