Fixed rate mortgages are still quite high, says expert

Fixed mortgage rates are still "comparatively quite high" as a result of lenders not reducing their margins, it has been claimed.

Ben Wilkie, editor at What Mortgage, explained that lenders have not reduced fixed rates to correspond with interest rates because the market is not "as competitive as it once was".

However, MoneyFacts has claimed that the average rates for two, three and five-year fixed deals stand at their lowest levels since its records began in 1988.

A future increase in interest rates might not lead to an instant rise in fixed mortgage rates and could result in lenders reducing their margins, Mr Wilkie added.

"A lot of people are thinking that if the market gets more competitive, then the actual rates won't rise that much; it is just that the margins that lenders charge will get smaller," he said.

First direct claimed recently that 25 per cent of mortgages sold in 2010 have been on a fixed-rate .