Two-year fixed-rates return to 2007 levels

Financial data provider, Moneyfacts, has announced that rates on the typical two-year fixed mortgage have returned to their 2007 levels.

Interest on the average two-year fixed-rate deal is now down to 6.59% from a high of 7.08% earlier this year.

However, potential borrowers will need a hefty deposit to benefit from the fall because the average deposit being demanded by lenders has risen to 20%, up from 10% last year.

In addition, lenders have hiked the costs involved in securing a loan since the pre-credit crisis idyll of August 2007.

Application fees are up to an average of £964 compared with £803 this time last year.

The home loan market is also far less competitive than a year ago, with only 3,748 products on offer compared with 13,027 in August 2007.

Whilst acknowledging that falling rates benefit remortgagers, property experts see little to encourage potential first-time buyers into the market.

They need large deposits to secure the best rates and are likely to remain in watching and waiting mode until the market has bottomed out and the Government has clarified its position over changes to Stamp Duty.

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