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Mortgage market has completely changed in 18 months
19 June 2008 16:29
The average interest on a fixed-rate mortgage has increased by 23 per cent in just eighteen months, according to new research.
Defaqto, an independent financial data collection company, compared average deals from a range of different mortgage providers and found that interest rates for a two-year fixed-rate mortgage have increased to 6.71 per cent, from just 5.42 per cent in December 2006.
The largest rate increases occurred in base rate tracker mortgages, where the average arrangement fee for a three year mortgage increased by 121 per cent to £991.26.
David Black, principal consultant of banking for Defaqto, described the mortgage world as a completely different place from eighteen months ago - with wholesale funding drying up as a result of the current economic climate.
This announcement arrives as Mervyn King, head of the Bank of England, warned that the UK was facing its most difficult economic challenge for two decades with rising inflation and falling house prices.
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