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Cost of new mortgage debt drops

28/12/2009

According to research by Moneyfacts.co.uk, the cost of servicing mortgage debt (for people taking out two-year fixed-rate mortgages) has fallen to its lowest level since the start of the year, the Telegraph reports.

The interest rate on the average two-year fixed-rate deal now stands at 4.86%, after lenders - over the last week - cut rates by as much as 0.4%.

The number of two-year fixed-rate mortgage deals charging less than 4% interest has risen from 53 to 94 in the last two months alone, suggesting that more people taking out a mortgage will be able to benefit from the low base rate - and make smaller payments towards their mortgage debt each month.

Michelle Slade, a spokesperson for Moneyfacts.co.uk, said: "Lenders finally appear to be putting the `open for business` sign back in the window and bringing competition back to the mortgage market.

"Borrowers will be hoping that the early Christmas present they have received from lenders will continue into 2010."

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