Mortgage rates still have much further to fall if they are to regain the competitive edge they were gaining earlier in the year, Moneyfacts.co.uk has said.

While Abbey, Halifax, Woolwich and other lenders have cut the cost of their mortgage products in recent weeks, but the average mortgage is still more expensive than it was six months ago, despite the base rate remaining static.

After the Bank of England’s Monetary Policy Committee cut interest rates to 0.5 per cent in March, mortgage lenders followed suit and slashed their rates, but since then they have crept back up again.

For example, Moneyfacts’ analysis has found that borrowers with a 40 per cent deposit who are looking for a £150,000 mortgage are paying an average £45 a month more than if they had taken out the same mortgage six months ago.

Michelle Slade, spokesperson for Moneyfacts.co.uk, commented on the research: “While lenders have made positive steps in reducing rates, more is still needed to counteract the large increases they made in previous months.”

With swap rates lower than they were six months ago, mortgage customers will be demanding to know why the banks are have increased rates for the same deal.

But, there is good news, Ms Slade offered, as recent weeks have seen more rate cuts, and credit conditions are slowly easing, seeing higher loan to value deals returning to the market.

“A number of lenders are increasing the LTV up to which their best deals are available, while other lenders are moving to offering higher LTVs,” she explained.

“In the last month alone the number of deals available to borrowers with a 10% deposit has increased from 88 to 109, while the total number of mortgages available has moved back over the 1,800 mark for the first time since January 2009.”

© Fair Investment Company Ltd