The average five-year fixed rate mortgage deal has hit 6%.

In June the average five-year fix was 0.43% more expensive and the average two-year fixed rate deal increased by 0.41% to 5.08%.

About 65 residential mortgage products have dropped from the market, leaving 1,242 on the shelves.

Borrowers looking for a 90% loan-to-value - or 10% deposit down - deals have gone up 21% during June, with Britannia, Cambridge, Earl Shilton, Leek United and Saffron building societies all entering the niche market.

“Anyone looking for a new fixed rate deal needs to act fast as lenders continue to fall over each other to increase rates," Louis Kaszczak, of independent finance reviewers Moneyfacts.

“No one seems to want to offer the lowest fixed rate deal. The only positive news is for those with a small deposit, where competition is slowly returning to the market.”

Kaszczak added not many borrowers would likely take up an average five-year fix standing at 6.79% for those with a 10% deposit.

House prices dropped across a number of regions in May, according to the Land Registry.

The Halifax and Nationwide Building Society released figures suggesting the average cost of housing rose during the month, the Land Registry data came to a different conclusion.

According to the Land Registry, the average property in England and Wales dropped in value by 0.2% between April and May.

The region with the most significant annual price fall of 17.2% was the north-east, while Manchester  experienced the greatest annual drop in value with a movement of 23.8%.

Another housing market survey by Hometrack shows prices stood still in June as the number of new buyers increased.

Rising sales volumes, a dwindling supply of housing for sale and a continuing increase in demand have all contributed to the standstill.

The survey shows the number of new buyers registering with estate agents rose by 4.6% in June, the fifth monthly increase in a row.

New buyer registrations have grown by 36% since the start of the year in stark contrast to the same period last year when agents registered an 18% drop in the number of buyers on their books.

Sales have also risen by more than 80% since the start of the year, albeit from a low base.

One of the best sources of fixed rate mortgage deals is a mortgage comparison site like ours.

Mortgage approvals in May hit a 13-month high in May with 31,162 loans approved for buying a property, 7% more than in April, the British Bankers’ Association said.

The figure was also 16% higher than May 2008; the first time the annual measure has shown an increase since November 2006.

Banks and building societies are also pushing up mortgage rates, despite Bank of England interest rates remaining steady at 0.5% for several months.

The Bank of England also says mortgage lenders are still turning down more applications - with 16% of applications refused last month, up 33% from 12% in December 2008.

The message from lenders is clear. If borrowers have a big cash deposit and impeccable credit record, then a mortgage to buy a home is available.

Best fixed rate deals are offered to those putting down the biggest cash deposits.

The ongoing weakness in the remortgage market dragged down the overall lending figures, with total advances of £7.7 billion the lowest since February 2001.

This is sending another clear message to borrowers – lenders don’t think house prices have stopped falling and unless borrowers who want to remortgage have a large slice of equity in their property, the mortgage market is closed to them.

According to research by Fitch Ratings, the worst places for negative equity, where homeowners are trapped with being unable to remortgage are Northampton, Nottingham, Derby, Peterborough, and Lincoln that take five of the top 12 places – including the first four – in a league table of the top 100 cities and towns in negative equity.

This negative equity effectively wipes out any chance of a remortgage in the East Midlands, as Leicester also features in the top 12 as well.

Net lending, which strips out redemptions and repayments, also fell for the third month in a row to £2.3 billion, a level last seen in early 2001, when the average mortgage taken out for house purchase was just £74,400, compared with £133,600 in May.

The number of loans arranged by people remortgaging fell further during May to a near-nine-and-a-half-year low of just 24,847, 60% below levels seen 12 months ago.

But despite falling for the fifth consecutive month, the BBA said loans for remortgaging and those for other purposes, such as equity release or buy-to-let, appeared to be stabilising at their current low level.

BBA statistics director David Dooks said: "Steady monthly increases since last November have seen the number of loans approved for house purchase recover to levels seen in early 2008, although gross and net mortgage lending show a subdued wider mortgage picture.

"However, unlike much of the mortgage market, the high street banks are still seeing lending growth and improved mortgage availability is reflected in higher average loan approval values."

Many lenders are still heavily advertising mortgages at low headline rates, but it’s worth checking out your options on a mortgage comparison site like ours.

Keeping up with the property market is taking some doing this month as several market ‘trackers’ announced their latest findings.

The Halifax has reported home prices increased by 2.6% in May, pushing the price of the average UK home up by more than £4,000 to £158,565.

The jump helped to reduce the annual rate of decline in prices to 13.6%, from 17.8% in April.

This is only the third time prices have gone up in the past 21 months, according to the Halifax.

Nationwide data, based on the building society’s mortgage loans, showed that prices rose by 1.2 % in May, the second monthly rise since March.

Property intelligence group Hometrack said house prices remained unchanged in May, the first time in 20 months their data has not recorded price falls

The Land Registry says the price of the average home in England and Wales dropped 0.3% to £152,898, the smallest monthly drop in nearly a year.

However, property values were still 16.2% below April 2008, just below February’s record decline of 16.4%.

Land Registry figures are based on actual home sales, although they exclude the sales of new-build homes and properties worth less than £40,000.

Nitesh Patel, housing economist at Halifax, said: “Historically, house prices have not moved in the same direction month after month, even during a pronounced downturn.”

But she added there were signs the market was stabilising, with Bank of England figures showing that the number of mortgages approved for homebuyers rose to a one-year high of 43,201 in April — though this was still 22% fewer than in April last year.

The Royal Institution of Chartered Surveyors said that house prices could be propped up by a shortfall in supply as sellers, reluctant to accept a lower price, delay putting their homes on the market.

All but the most cash-rich first-time buyers have been squeezed out of the market as lenders demand hefty deposits before allowing them to qualify for the most competitive deals.

The Council of Mortgage Lenders said that the average first-time buyer is now paying a deposit of 25%, meaning that the price rise in May added £731 to the bill for a down payment for prospective buyers.

Interpreting the state of the market is difficult  - but the reports appear to show that price falls are slowing, more borrowers are looking to buy and lenders are agreeing more mortgages – but activity is nowhere near top of the market levels of a year or two ago.

Finding mortgages is still tough if borrowers don’t have at least a 25% cash deposit for buying or an equal amount of equity for remortgaging.

If you are looking for the best rate mortgage or best rate remortgage, your best bet is still to consider a mortgage comparison site.

Rates and products are coming on and off the market quickly and searching out the best deals is easier on the web rather than spending hours tramping the high streets.

The number of homebuyers, including first time buyers,  signing up for new mortgages was up again in April - for the third month in a row.

The National Estate Agents Association is also reporting that their members are reporting increased sales - but then they have a vested interest and don’t point out that many estate agents have closed in the past 12 months, so presumably the sales would increase in the offices left.

The mortgage market is a minefield for unwary homeowners or first time buyers looking for the best rate mortgage deals.

Taking out a loan is a straightforward process –

• The lender examines the homebuyer’s credit record and assesses them as a good or bad risk

• A surveyor reviews the property they want to buy and gives an opinion of value for security

• The bank or building society then makes a decision to lend or not based on risk and security

That’s it. It’s not complicated…or the procedure wasn’t complicated until homebuyer and homeowners looking to remortgage found out more about the process as the recession exposed what generally goes on behind closed doors.

Finding the best remortgage deal means thousands of homeowners are running in to difficulties with property valuations.

Lenders are so worried about exposure to risk from existing customer s losing their jobs and security drooping out from under the loan because of falling house prices, only a few cream of the crop customers are now qualifying for a remortgage.

Even then, these A-listers are paying over the odds because valuers and lenders mark down their home values.

The problem comes with the amount of equity a homeowner has – that’s the difference between the property value and the mortgage debt against the property.

If a homeowner has 20% equity, they can expect to pay about 1.3% for the same mortgage as a homeowner with 25% equity.

This amounts to about  £135 a month more per month on mortgage payments for the homeowner with 20% equity.

Evidence is emerging that lenders are marking down property values that leads to homeowners paying a higher interest rate for their mortgage.

For instance, the Halifax docked 40% off one house price even though the bank’s own house price index has fallen by 20% in a year. That means the borrower, who had a £250,000 mortgage, ended up paying an additional £290 a month because the bank valuation took the house from the 25% equity band in to the 20% equity band.

For remortgages, many banks and building societies rely on mortgage data collected from various sources – either their own in-house indices or the Land registry or an equation based on several sources.

Some lenders instruct surveyors to give a ‘drive by’ report on just the outside condition and neighbourhood. This doesn’t reflect new any rear extensions or internal features and improvements that could add money to the property’s value.

For homeowners looking for a competitive remortgage deal, making sure a home is valued according to the rules laid down by the Royal Institute of Chartered Surveyors is a must.

These rules are aimed at standardising the valuation process the surveyor conducting a thorough visit to the property and using at least three recent ‘comparables’ to show what similar houses within 500 metres or so of the valued property have sold for.

Another good idea is to use a mortgage comparison site like ours to compare lender’s mortgage rates and how the monthly repayments would vary if a property was pushed in to another equity band.

Millions of homeowners are locked out of remortgaging because of the house price crash, according to the Council of Mortgage Lenders.

Homeowners with mortgages have several problems, say the CML:

• A million households are in negative equity - which means they owe more to their lenders than their homes are worth

• Another million households are teetering on the brink of negative equity because they owe up to 90% of their home values to a bank or building society

• Millions more can’t remortgage because they don’t meet lenders minimum criteria for getting a new loan

The CML estimates almost 12 million homeowners have mortgages - this doesn’t necessarily mean 12 million mortgages on 12 million homes, because some will have second mortgages or further advances or mortgages on second homes.

That means if two million homeowners can’t get a remortgage 1-in-6 people are locked in to their current deals.

If you are in negative equity or cannot find a remortgage deal, sit tight and wait for the market to level out and eventually start to rise. As long as you can keep up with your repayments, trhe fact your home is worth less than the loan doesn’t matter unless you need to sell.

Government watchdog the Financial Services Authority reckons 2.5 households could slip in to negative equity over the next 12 months - which means the amount of homeowners who can’t remortgage could be as high as 1-in-4 in 12 months time.

Latest figures from Nationwide Building Society show house prices have dropped 17% in the past year.

If you have equity in your home, use a mortgage comparison site like ours to search the market in minutes to see if any of the best rate remortgage deals suit your needs.

Banks and building societies are just like any other business - their advertising is aimed at grabbing your attention, so many set a ‘best mortgage rate’ deal to bait the honey trap.

According to the Council of Mortgage Lenders (CML), in January 2009, the latest month statistics for which statistics are available, 67,400 mortgages were offered - 23,400 to first time buyers and movers and 44,000 as remortgages.

The average deposit for home movers was 35%, according to the CML - the figures are highlighted in the table.

You can use this table to get some idea of much you need to go to a lender for a mortgage - and to find a mortgage that suits your needs, you can use our mortgage comparison service.

In the month of February UK house prices fell another 1.8%. This has pushed the cost of a home below £150,000 mark. According to Nationwide building society the average property price in UK is now at £147,746 which is £31,612 less than a year ago.

The chief economist at Nationwide Fionnuala Earley says ‘The dramatic cuts in interest rates have improved the affordability of houses, but it has yet to increase the transaction activity to sufficiently boost the house sales, or stop the slide of house prices falling further’.

However, this was in sharp contrast to the figures reported by Halifax last Month that showed house prices rose by 1.9% in January. Seema Shah of Capital Economist says ‘These figures reveal a sharp drop in the house prices and dash any hopes that the housing market will start on a stronger footing in 2009. Unfortunately if this trend continues the house prices could drop around 30% below their peak by December.’

This has the potential of causing a mammoth disaster as millions of home owners fall into the trap of negative equity. According to various figures up to 5 million people could be paying mortgages which are higher than the value of their homes. It has been estimated that as much as 3.8 million home owners are facing a serious decline in the value of their property compared to the amount of borrowing by the end of the year. If house prices drop by another 10 to 20% by the end of the year then another 1.2 million home owners could be facing the prospect of negative equity.

However, according to the institute of chartered surveyors, some recent data has suggested that the new buyer enquiries have increased for the last three months in a row. But analysts warn that these enquiries need to be converted into actual sales to have any impact on the sluggish UK housing market.

On a positive note, a third of UK borrowers have seen their monthly mortgage payments reduce by an average of £240 since the interest rates have started falling. As the interest rates have dropped from a high of 5.5% at the end of 2007 to 1% this month, the average monthly mortgage payments have fallen by a third, leaving home owners with extra cash in their pockets.

The government has plans to build 2m new homes by 2016  but this is threatened by the sharp decline in house building across UK. The new housing projects have fallen to their lowest level since the records began in 1980.

Analysts believe that as a result of fewer houses being built, the government is unlikely to achieve its target of building 2 million homes by 2016 and 3 million homes by 2020.

The main reason for the sharp decline in new house builds is the current credit crunch which is making it impossible for the developers to get the finance that they are looking for. The banks have become far too strict and cautious when lending and have really tighten up their criteria. If we continue at the current level of house building then there would be around 1.2 to 1.3 million homes by 2016 as opposed to 2 million.

As house building companies found it harder to get finance from banks, the new house building projects began to fall in the first half of 2007 and the decline continued ever since. This was further aggravated by a record fall in mortgage approvals and buyers being pushed away due to falling house prices. The Council of Mortgage Lenders has reported a 52% drop in mortgage lending over the last year.

According to official figures, the number of new houses being built in England fell by around a quarter during the last three months of 2008. The figures from the Department of Communities and Local Government shows the number of new homes being built in the final quarter of last year was, at 16,310, its lowest level since comparable records began in 1980. This figure was 27% lower than in the previous quarter and 58% below the number of new houses started during the last quarter of 2007.

The government is hoping to build around 240,000 net new homes every year until 2016. However, even in 2006-07 when there was no housing crisis, there were only 200,000 new homes built, which is far less than the stated target of 240,000 new homes every year.

At the peak of the housing boom, it was estimated there were around 300,000 people employed in the industry according to the Home Builders’ Federation. Since then the industry has lost around a third of its work force.

However, there seems to be some room for optimism as in recent weeks, it has been reported that there has been an increase in the housing market activity with a rise in new buyer activity. The government needs to convince the banks to start lending to home buyers, house builders and small businesses in order for the economy to pick up again.