Interest rates charged by Building Society’s and Banks on fixed rate mortgages rose by an average of half a percent between June and July this year, making the highest level this year.
The average rate on a five-year 75 percent loan-to-value mortgage taken out in July rose to 5.7 percent, its highest level since October. Similarly a two year fixed rate mortgage based on the same lending criteria reached 4.46% showing the highest level for this product since December.
Perversely, the standard variable rate for mortgages remained the same at 3.95%, still considered to be low by historical standards.
The increase in the two and five year rates reflect the lenders concerns over the potential of a housing market recovery and also it’s sustainability if and when it starts, along with longer term interest rate expectations.
It appears that both lenders and consumers are taking every precaution in the housing market, having had our fingers burnt by the current crisis, no-one is in a hurry to burden themselves with further possible bad debt.
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