Average mortgage rate now hit 2.52% from 3.14% last year
Data from the website moneyfacts.co.uk has shown the average two year fixed deal has now fallen to 2.52% from last years 3.14%. 9 years ago in 2007 the average 2 year fixed deal was 6.26 %. However banks are charging large up front set up fees to arrange these mortgages with the average fee now £964.
The Bank of England Governor Mark Carney has also indicated that interest rates will remain low for longer than expected with no interest rate rise predicted until 2017, which is leading to an overheating of the housing market.
Charlotte Nelson, from Moneyfacts stated “The current mortgage market boasts some of the lowest rates on record, which is great news for borrowers, but the increase in the average mortgage fee clearly shows that some of these headline grabbing rates are being compensated for elsewhere, Some of the fees borrowers are being asked to pay are nothing short of shocking, with up to £7,499 being charged for some high value loans.
“While arrangement fees allow lenders to offer a lot more flexibility with the types of mortgages they offer, the cost of administering the mortgage does not vary that greatly from one case to the next, which could lead many to wonder why there is such a big difference between the fees charge and why they are even charged in the first place.”