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Cost of mortgage debt stays relatively high

By Matthew Plant - Financial specialist

20 August2009

The average rate on a new mortgage is 1.3% lower than this time last year despite a 4.5% drop in the Bank of England`s base rate, The Times reports.

According to moneysupermarket.com, the average rate on new fixed- and variable-rate mortgages across all loan-to-value ratios is now 5.12%, compared with 6.42% in August 2008.

Hannah Skenfield, of moneysupermarket.com, said: "The Bank of England base rate has dropped by 4.5 per cent since August last year, however despite this low rate environment there is a significant disparity in the amount of this saving being passed on to mortgage borrowers by the main UK lenders."

A debt expert for Think Money commented: "During an economic downturn, many people will struggle to make payments towards their mortgages and other debts. Any drop in income can make it harder to afford all their financial commitments, from utility bills to unsecured debt repayments.

"We would advise anyone struggling to cover their day-to-day expenses or repayments to their debts to contact a professional debt adviser without delay."

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Tags: mortgage, mortgage rates, fixed rate, variable rate, mortgage debt, debt

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