In a sign of the times the average fixed rate home loan for up to 75% of a property's value has fallen to 3.8% in May which compares favourably with the average of 4.47% in September last year. There has also seen a drop in almost every different type of mortgage instrument which is not only a reflection of the ultralow UK base rate but also issues with the UK property market.

While on the surface it looks pretty good that UK mortgage rates have fallen to record lows ultimately this is a reflection of the difficult property market. If demand was there for property then there would be no need to reduce mortgage rates to current levels therefore we can only assume that mortgage lenders are looking to entice more and more people into the property market. A reduction in mortgage rates is a reduction in net profit margins and when you consider that the cost of debt has increased over the last couple of weeks this reduction in mortgage rates could be short-lived.

The ongoing recovery in the UK property market is also very patchy with some areas of the UK showing little or no increase in property values while others such as London have returned to pre-credit crunch levels.

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