Mortgage rates 'are improving'

Thu 11 Mar 2010 - Published in Mortgages

Statistics from the Bank of England show that the average cost of a two-year fixed-rate mortgage has dropped to the lowest since the summer of 2003.

In February, the average deal had a rate of 3.88 per cent attached, after falling from 4.35 per cent last year and 5.74 per cent in February 2008.

Andy Pratt, chief operating officer at Alexander Hall, claimed that the drop was caused by increased competition in the mortgage market.

"Rates are low and the confidence is back within the lending community. Funding is not quite at the right level yet, but they are looking to lend a little bit more so it has become a little bit more competitive," he explained.

However, Mr Pratt pointed out that conditions could be slightly worse for first-time buyers, as deposit requirements have risen at the same time rates have fallen.

He added that people who ask their parents for help with their deposit could be in a good position to buy their first home.

The expert also predicted that it is unlikely new lenders will enter the mortgage market and the existing members of the sector will have to compete for business among themselves.

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