Mortgage rates top seven per cent

The cost of mortgages has now risen to the point where the average fixed-rate deal has an interest rate of over seven per cent.

Finance website Moneyfacts.co.uk has found that the rate has reached an average of 7.02 per cent for two-year fixed rate deals, amounting to a 35 per cent increase in payments for consumers compared to two years ago, the Times has stated.

Moneyfacts spokesperson Darren Cooke said the situation was a consequence of high interbank lending rates.

He commented: "Any increased cost to lenders in arranging the funds on the money market is passed on to customers."

Mortgage company Mform has predicted that high rates will persist and the number of deals at interest rates of under six per cent will drop in the coming weeks, reports FT Adviser.

Those unwilling to take on such expensive mortgages for house purchases may look to save money through obtaining a house by the self build method.