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Good news for buyers as mortgage cost drops
Evidence that the cost of mortgages are dropping has finally arrived, indicating that the housing market is finally showing signs of recovery.
Interest on the most popular form of home loan, fixed-rate two-year deals, has fallen for the first time since February, according to figures from the Bank of England.
The drop will please the huge number of those struggling first-time buyers who are desperate to get a foot on the housing ladder.
The average interest rate on a two-year deal stood at 6.36 per cent in July for borrowers with a deposit of 25 per cent, down from 6.6 per cent in June, according to the Bank’s latest data.
While the overall cost of all fixed-rate mortgages is still more expensive than a year ago, it is now down significantly from the eight-and-a-half-year high in June.Nicholas Leeming, director of propertyfinder.com, said: “This is an early indication that the Bank of England’s cash injections are finally filtering down to help those borrowing money.
“We can’t rely on lower base rates while inflation looms large. So to see some lenders actually cutting their mortgage rates is a very positive sign and indicative of the recent reduction in interbank lending rate.
“It’s early days, but if lenders actually begin to pass on the benefit of previous cuts to mortgage borrowers, and competition returns to the market, we could really begin to see light at the end of the credit crunch tunnel,” propertyfinder.com’s Mr Leeming went on to explain.
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