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By David Stevens Personal Finance Correspondent
Tuesday, 12 August 2008
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YOU could be forgiven for thinking that that the gently improving mortgages rates following the Bank of England’s rate freeze was a glimmer of good news amongst the train wreck of bad news stories affecting our pockets.
But like the drizzle ruining this already soggy summer, while mortgage rates are dropping marginally – 0.18% to be exact – mortgage fees are increasing.
Mortage rate has dropped
According to Moneyfacts, the average two-year fixed rate mortgage has dropped from 7.08% to 6.9% in the last four weeks, yet the average mortgage fee over the same period has increased by £100.
On a typical £150,000 repayment mortage, one hundred pounds represents a 0.06% increase – exactly a third of the value of the decrease.
Bank of England confirms drop
The Bank of England meanwhile has officially reported a 0.24% drop based on a new two year mortgage deal by someone putting down a 25% deposit.
While this may still represent a shimmer of good news, when averaged out across the market, the decrease in mortgage rates sits pretty much in equal measure to the increased mortgage fees, which currently sit at their highest level in eight years.
No pattern apparent
Speaking in the Guardian, Darren Cook from Moneyfacts pours rain on any good sentiment by pointing out that no pattern is yet apparent.
“Some [mortgage lenders] have reduced rates and increased charges; some have left rates at a high level; and others have changed fee structures,” he said.
Mortgages that have had their rates cut including 0.1% off a number of Abbey’s 2-year and 3-year fixed and tracker mortgage deals; 0.38% off a range of mortgages from HBOS lenders (which include Halifax, IF and Bank of Scotland) and up to 0.25% off some of Nationwide’s fixed rate mortgages.
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