Cost of mortgage deals rises amid fears for market

HOMEBUYERS are facing rising interest rates on mortgage deals, with borrowers now having to pay almost £600 more over the course of a two-year fixed deal than at the start of the summer.

A mortgage drought is adding to problems, with the number of deals on offer halving since the start of the year.

Experts warn that lenders are increasingly nervous about the ‘fragile’ state of the housing market and fear ‘darker times ahead’.

Last week official figures revealed house prices surged in every region in August. But economists have predicted that the rally could soon reverse as the Government scales back financial support for households and businesses.

High demand in the property market is said to have led to delays in everything from buyers securing mortgages to completing all the legal paperwork. It is currently taking buyers an average of 160 days to go from agreeing a sale to moving in – up from 95 days last year, say analysts TwentyCi.

At the same time, the total number of mortgage deals available has dropped by 55 per cent since January, from 2,477 to 1,099, according to figures from data analysts Defaqto.

Dominik Lipnicki, of Your Mortgage Decisions, said: ‘Lenders appear to be worried about just how fragile the market really is.’

Meanwhile, the average twoyear fix for buyers with a 25 per cent deposit costs £585 more in interest over the 24-month term than it did six months ago.

A UK Finance spokesman said: ‘Rates offered will be influenced by several factors including the lender’s funding and operating costs, risk appetite and provision for any potential losses.’