Headline rates 'no longer as important'

20/08/2008

The mortgage market has changed drastically over the past year, moneysupermarket.com has said.

Figures from the financial website show that the average best-buy rate on a two year fixed deal has risen since the onset of the credit crunch, going from 5.73 per cent to 6.15 per cent.

This is despite the Bank of England having cut interest rates from 5.75 per cent to five per cent over the same period.

Conversely, the average lowest fee for the same two year fix has fallen from £2,100 to £1,300.

Over recent months, the credit crisis has squeezed revenues at many mortgage firms - causing them to hike rates in order to keep their balance sheets healthy.

Louise Cuming, head of mortgages at moneysupermarket.com, explained: "Lenders do not have to rely on headline rates to hook borrowers in at the moment. Often a great headline rate has come with an extortionate fee, but lenders are being much more transparent now about the true cost to the consumer and where their profit comes from."

Tags; Housing Debt and Bills, Debt Management and Banking,

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