First-time buyers rates up 0.75 pct on year

LONDON (Reuters) - The best fixed-rate deals for first-time buyers are still up to 0.75 percent higher than a year ago despite cuts in official interest rates, according to a survey.

Online mortgage broker mform.co.uk said the most competitive two-year fixed deals for borrowers with a 10 percent deposit are currently 6.44 percent compared with 5.69 in November 2007.

This is even though the Bank of England base rate has almost halved from 5.75 percent last year to three percent.

"It defies logic that the best fixed-rate deals for first-time buyers are currently more expensive than a year ago when base rates have been cut so dramatically," said Francis Ghiloni, marketing and business development director of mform.co.uk.

The picture is similar for three-year and five-year deals -- the best deals currently are 6.44 percent and 6.14 per cent respectively compared with 5.69 percent and 5.39 percent in November 2007.

Meanwhile, the key interbank lending rate, 3-month LIBOR, is currently 4.496 percent compared with 6.6 percent this time last year.

That adds up to profits for lenders as during the same period they have cut the top rates for cash ISAs from 6.26 to 6.01 percent now, mform's research showed.

The only glimmer of good news for first-time buyers and borrowers with smaller deposits is that fees have fallen. The best deals have dropped from around 999 pounds last year to 599 pounds at present.

Mform searches direct mortgage products from over 70 lenders.