Best Mortgage Direct - 0845 194 7102

Fixed rate mortgages now have a market share of 69% of all residential mortgages in the UK, compared to just 51% in 2007.

Despite a massive 2.61 % drop in the two year swap rate between 1 October and today, the average two year fixed rate mortgage has only dropped by 0.71 %.

The profit margin lenders are charging continues to grow. This time last year the gap was 1.12 % between the cost of the swap rate and lending rate now today it is 2.92 %.

Commenting, Michelle Slade, analyst at Moneyfacts.co.uk, said: “By not reintroducing cheaper tracker mortgages to the market, the lenders are leaving borrowers with little option but to go on to more expensive fixed rate mortgages.

“It is evident that lenders are continuing to increase their margins, despite a fall in the cost of funding.

“Borrowers expect to pay a slightly increased price to fix their mortgage repayments compared to tracker deals. However, today the gap between the average two year fixed and tracker mortgage stands at 1.16%, compared to just 0.14% this time last year.

“It would appear that all lenders are adopting a similar approach, despite calls from the Government to pass on cuts to borrowers.”