After mortgage rates went up as a result of the credit crunch they are now starting to come down to the levels seen last year in August.
Homeowners who were struggling with such high rates will welcome the new rates. This show the banks aren’t being as strict as they were at the height of the credit crunch as they attempted to limit the risk and protect their profits. However the base rate was 5.75% last August and it is now down to 5% so the banks aren’t running their rates as close to the base rate as they were last year.
To take advantage of these new lower rates the deposit required is higher as are the fees associated with taking on a mortgage making the new mortgages not quite as attractive as they may have first seemed.
This market research from price comparison website Moneyfacts revealed the rates have returned to similar levels of one year ago.
You can expect to find, on average, a two-year fixed rate mortgage for 6.59%, a tad higher than in August 2007 – 6.56%. At the peak of the credit crunch in July rates were as high as 7.08%.
The bad news is the costs associated with arranging a mortgage are still higher than this time last year and to get the best rates you have to able to afford the large deposits which are now on average 20% higher. Although lenders have reduced the percentage rates they have continued to increase the fees over the last twelve months making the new rates not quite as attractive as it first seems. Arrangements fees have been rising over the last 12 months are on average now £964 compared to £803 this time last year.
The problems have been blamed on the lack of mortgages on the market. A year ago there were 13,027 mortgages to choose from, now there are only 3,748 mortgage products available. If you were looking for a 100% mortgage a year ago you had 33 to choose from, now there are only two lenders offering 100% mortgages.
It is worth taking a mortgage quote to see if these new reduced rates are available to you, possibly saving you hundreds of pounds a year.
