Mortgage recovery beckons as deals on shelf for longer

"The cheap cost of wholesale funding looks to remain totally disjointed from the actual final price of a new mortgage.

"The average rate of a new variable and fixed-rate mortgage has remained fairly static during the past three months. Providers are clearly unable to pass on any savings achieved from the lower cost of wholesale market rates.

"We have reached a plateau in the mortgage market and rates are unlikely to move noticeably from their current levels within the foreseeable future

"Many economists have predicted that the Bank Rate will remain at its record low well into the fourth quarter of 2010. We need to accept that mortgage rates are unlikely to fall much lower and that the overall cost of financing personal debt will remain high.

"If standard variable rates remain unchanged in line with the bank rate for the duration of 2010, there seems very little incentive for anybody to sacrifice a rate of as low 2.50% for a new mortgage. This could have disastrous effects for the remortgage market."

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