The cost of fixed rate mortgages rose to the highest levels for eight years in June.

Figures released by the Bank of England showed that although the cost of a fixed rate mortgage increased in June, figures fell again in July. The average interest rate for a buyer with a 25% was said to have risen from 6.26% in May to 6.6% in June, the highest interest rate seen for this type of mortgage since February 2000.

Despite mortgage interest rates rising steadily in the months leading up to June, recent rate cuts by a number of banks have reduced the cost of this popular type of mortgage in the last month. Ray Boulger, from mortgage brokers John Charcol explained the overall drop in rates: "Some lenders have been cutting their rates more than once a week, so overall the cuts have been quite big. The most important thing though is the cost of the best deals; but I have no doubt that the average rate for July will be lower than for June."