Bank profits on fixed rate mortgages are at record levels.

Figures showed yesterday that the average two-year fixed rate for a mortgage had climbed to 5.18%, while swap rates — the borrowing rates between financial institutions — stood at 2.04%.

The 3.14% margin is the widest since Moneyfacts, a personal finance website, started its records in 1988.

Lenders are continuing to raise mortgage rates despite their own costs falling.

Bank of England interest rates are at an all-time low of 0.5%.

Daily Telegraph