Moneyfacts: Mortgage rates back to August 2007 levels

Permalink: Moneyfacts: Mortgage rates back to August 2007 levels
by Kay Murchie

Research by price comparison website, Moneyfacts, has discovered that mortgage rates are back to the same level they were at the start of the credit crunch.

According to Moneyfacts, the average rate on a two-year fixed deal is now 6.59% - nearly the same as the 6.56% in August 2007 and down from 7.08% early last month.

However, Moneyfacts notes that the costs associated with mortgages remain high and only those with deposits of around 20% can secure a mortgage.

Furthermore, lenders are charging higher fees with the average mortgage arrangement fee now £964 compared with £803 in August last year, said Moneyfacts.

Meanwhile, there are now 3,748 mortgage deals available compared with 13,027 mortgage products last August, according to Moneyfacts, showing what an impact the credit crunch has had on the housing market.

In addition, the 100% plus mortgages have all but disappeared. This time last year, there were approximately 33 lenders offering these types of mortgages while just two lenders offer them currently.

The decline in the availability of mortgages and higher rates and fees has had a devastating affect on many, particularly housebuilders.

Yesterday, Persimmon which is the UK’s largest housebuilder by market value, reported a 64% slump in first-half pre-tax profits.

Since the start of the year, it has slashed 2,000 jobs as it struggles to cope with the housing market slowdown.

Furthermore, housebuilder Bellway reported a 45% fall in reservations of its homes in the second half of the financial year, compared with the same period last year.

Figures released this week from the Council of Mortgage Lenders revealed that gross mortgage lending rose slightly in July by 5% compared with June, however this is 27% lower compared with July 2007.

In related news, business intelligence company, Datamonitor, said that the UK mortgage market will shrink by a fifth by the end of the year.