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Fixed rate mortgages highest since 2000

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Date: Wednesday 09 Jul 2008

LONDON (ShareCast) - Homeowners buying a new two-year fixed-rate mortgage are having to splash out more on their repayments than at any time in the last eight years, new figures showed today.

The Bank of England data revealed that the cost of a home loan fixed for two years with a 25% deposit increased by 37 basis points to 6.63% last month. The last time they were that high was back in February 2000.

This explains why less people are looking at short term fixed rate deals and contributes to a massive drop in mortgage approvals and a sharp decline in house prices.

The cost of a home fell at the fastest annual rate for 16 years last month and prices are down 7.3% from the peak seen in October of last year, said the Nationwide Building Society last week.

The Bank of England said recently that mortgage approvals fell for the thirteenth consecutive month in May, down 28% on the month before and by 64% on a year ago.

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