Mortgage competition 'leading to cheaper rates'

Additional market competition has led to the emergence of cheaper mortgage rates, according to one lender.

Andy Pratt, chief operating officer at Alexander Hall, said confidence is gradually returning to the lending community, which can only be good for consumers.

"Funding is not quite at the right level yet, but they are looking to lend a little bit more," he noted.

Mr Pratt claimed it is extra competition that has driven rates down, as opposed to additional funding.

He said that if first-time buyers have sufficient capital to afford a mortgage, they are in "one of the best positions for a long time to be able to afford the monthly payments".

According to the Bank of England, the average cost of a two-year fixed-rate mortgage is at its lowest level since the summer of 2003.

The typical deal carried a rate of 3.88 per cent last month, compared to 4.35 per cent 12 months ago and 5.74 per cent in February 2008.

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2010-03-11 13:34:52 © Moneyextra.com