17 Jun

Mortgage costs 'hit ten-year high'

Mortgage costs 'hit ten-year high'

The cost of mortgages has risen to its highest level in a decade, according to the results of a new survey.

Conducted by Moneyfacts.co.uk, the average rate of interest on a two-year fixed-rate deal was found to be 6.75 per cent, while five-year fixed-rate deals offer an average interest of 6.72 per cent.

According to Darren Cook, mortgage expert at Moneyfacts.co.uk, this has brought "more pain" for house buyers.

"If the current economic climate persists, it is not unreasonable to predict that we may see a situation where a higher proportion of borrowers are on their lender's SVR [standard variable rate], rather than on an actual mortgage deal," he said.

Mr Cook added that SVR deals may become more attractive if the Bank of England maintains the current base rate or lowers it during the remainder of 2008.

Last week, Mr Cook suggested that the current economic uncertainty could mean a five-year fixed rate deal is a more popular option with homeowners.

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