Fixed rate mortgages rise despite cut

Despite last month's interest rate cut by the Bank of England, the average fixed-rate mortgage is higher than a month ago, according to price comparison site moneysupermarket.com.

Over seven out of every ten new mortgages being taken out are fixed-rate, so the revelation is likely to prompt even more outrage from the Government. Last week, Prime Minister Gordon Brown condemned lenders' lack of action on SVRs, which only make up a tiny part of the mortgage market.

In early December, prior to the Bank of England's decision, the fixed-rate average was 7.30 per cent – now it is 7.31, rather than the 7.05 per cent the Government might have hoped for.

Those select few borrowers with an excellent credit score can now find a best-buy fixed-rate mortgage at 0.39 per cent less than a month ago. But the bulk of the nation looking for a new fixed rate deal is likely to be worse off.

Louise Cuming, head of mortgages at moneysupermarket.com, said: " Our data shows, on average, unless you are a low-risk borrower, a new fixed-rate mortgage will cost you more. I shudder to think what would have happened to the average fixed-rate mortgage if the Bank of England hadn't cut rates.

"Many homeowners who waited until after the interest rate cut to get a fixed-rate deal will be worse off, much to their annoyance."