David Prosser: No let-up on home loans

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Louise Thomas

Editor

Before the Bank of England launched its quantitative easing programme, it talked frequently about how the "transmission mechanism" of monetary policy had broken down, meaning that interest rate reductions were not being passed on to mortgage borrowers.

Now that the Bank and others are talking about the worst of the recession being behind us, is the transmission mechanism a bit less up the spout? Not a bit of it: the personal finance data analyst Moneyfacts reported yesterday that fixed-rate mortgage deals, which have been rising in cost for a month or so, now come at an average price of 6 per cent.

And variable rate mortgages, at least at the higher loan to value multiples faced by most first-time buyers, are hardly any cheaper. Just to cap it all, Moneyfacts also warns that there are 5 per cent fewer mortgages available than a month ago.

In other words, if you're looking for finance in order to take advantage of falls in the housing market, it is becoming harder – rather than easier – to find it. And should you succeed in finding a lender prepared to offer you a deal, the price bears no relation to the current historic low at which base rates still tread.