The world of mortgages one year on

Michelle Slade, analyst at Moneyfacts.co.uk, comments: "One year ago the financial world changed completely as the credit crunch took hold. Today the world of mortgages is a completely different place.

"The standard factors which usually determine the rates at which mortgage rates are set, including bank base rate, swap rates and Libor rates are all much lower than this time last year, yet the rates on offer are much higher.

"As house prices continue to fall and the risk of default increases, the lenders are pricing more for risk and as a result these standard factors are not quite as influential on the rates as they once were.

"There does not appear to be a single aspect of the mortgage market that has not been unfavourably hit.

"Over time the mortgage market should continue to improve from its current position. The number of products will steadily increase and rates will lower with increased competition between lenders. However, it will be a while before lenders regain a healthy appetite to lend with the maximum LTVs on offer largely determined by the future decline in property values.

"With all the above said it is highly unlikely that we will ever get back to the same levels that we were at a year ago.

"In the last month numerous lenders have cut rates, so borrowers looking for a new deal can take some comfort from the fact that the situation is steadily recovering."