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Mortgage lenders crave a return to the good old days

Something curious is going on in the mortgage market. The Bank of England's base rate may have been at a historic low of 0.5% for more than a year, but mortgage lenders are no longer sitting on their hands.

The good news is the cost of fixed-rate mortgages is falling. By the start of this week, the average two-year fix cost 4.52%, less than at any time for seven years. Nor is it any longer the case that only those borrowers with the largest deposits are in a position to borrow.

The total number of mortgages available has risen sharply in recent months, as has those available to those with smaller deposits. There are almost 500 products now on offer with a maximum loan-to-value ratio of 85 per cent.

Less happily, lenders are slowly but surely trying to wriggle off the hook on which the plunge in base rates has left them hanging - their standard variable rates (SVRs) are inching their way upwards and those mortgage providers which have previously guaranteed not to charge an SVR of more than a certain premium above the base rate are dropping the promise.

Nationwide did so for new customers last year. Others have followed - notably Lloyds, the owner of Britain's largest mortgage lender, the Halifax.

What we are seeing, in fact, is a concerted effort by mortgage lenders to restore their market to some sort of normality - to the way things were before the credit crunch struck.

In those days, customers coming to the end of a special deal such as a fixed-term rate knew they would revert to a standard variable rate likely to be more expensive unless they began looking for a new offer. Lenders competed for business on the basis of those special offers.

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We have not returned to the status quo just yet. There are still fewer deals on offer, particularly for those borrowers with the smallest deposits. And the availability of mortgage finance may get worse before it gets better, given the pressures on lenders to repay the emergency support they received during the crisis over the next couple of years.

Still, opportunity knocks for many borrowers. Base rates may begin rising sooner than we expect - the OECD has said Britain must raise the cost of borrowing before the end of the year.

One way or another, the days of bargain basement standard variable rates now look numbered. But lenders want your business and for now, they're fighting for it. It may just be time to take advantage.

n Here's a challenge for a government that has so far been more timid on energy policy than it was while in opposition: it looks as if the market trends that enabled gas and electricity suppliers to cut bills earlier this year have gone into reverse.

Further cuts are unlikely and there is a possibility of bills going back up. That will put the spotlight on ministers who once talked tough about the energy industry but have been reluctant to spell out their plans now they are in Government.

If bills do start to escalate again, people will begin asking what happened to the Conservatives' promises to be tougher on the energy companies.