The interest rates on some mortgage products are now almost the same as they were in the summer of last year before the onset of the global credit crunch, according to a recent report. Officials from Moneyfacts have recently researched mortgage interest rates, and have found that in many cases they average rates are only very slightly higher than they were in summer of 2007.

The recent research relating to mortgage interest rates showed that the average interest rate on a fixed rate mortgage for two years was 6.56% last summer, and recent research showed that the average rate was 6.59%, which was only slightly higher than previously. A number of lenders have been reducing their interest rates on mortgage products over recent weeks.

However, there is concern that whilst interest rates may be coming back down after a period of rocketing the other costs associated with mortgages have been rising, and this includes sky high mortgage arrangement fees and higher deposit levels required from lenders, both of which have made affordability very difficult for first time buyers.

One industry official stated: “The pricing is getting back to where we were a year ago, but the appetite for lending is diminished.”

The reason why many lenders have been reducing the interest rates on many of their mortgage products is because there has been a recent drop in swap rates, and this is the rate at which lenders lend to one another. The drop in this rate has enabled lenders to drop their interest rates but other borrowing costs remain high.

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