Mortgage best rates less, deals cost more than 2001

Mortgage borrowers can find better rate deals than the last time the base rate was at its current levels but there is a sting in the tale, according to a financial website.

The current base rate of 5.5 per cent, which remained unchanged by the Monetary Policy Committee earlier this month, matches the rate of May 2001 but borrowers can find best rate mortgages that are up to 0.47 per cent below the level of 2001.

However, while comparing the interest makes it seem that borrowers are in a better position, taking a closer look at fees reveals a different story.

The best deals now charge fees up to five times larger than they did in 2001, with no fee deals disappearing from the deals for lowest rate mortgages.

According to Julia Harris, mortgage analyst at the Moneyfacts website, the net effect is that best rate mortgages are more expensive now than they were the last time the base rate was at current levels.

She said: "So while the rates appear more competitive then six years ago, the deals certainly are not, with inflated fees being the prime culprit. Lenders are squeezing yet more profit from each mortgage deal they complete."