Although mortgage rates for many customers are at an all-time low, the difference between these rates and other economic benchmarks – such as the Bank of England base rate and LIBOR – can be wider than they were between 2000 and 2007.

The factsheet, Your Mortgage and the Markets. explains that it costs banks more to fund their activities today and that the old relationships with the benchmarks no longer apply.

The factsheet sets out some of the reasons why current mortgage rates do not follow closely the base rate and LIBOR, which include banks funding themselves using a mix of wholesale money and customer deposits, wholesale rates being much higher than the LIBOR rates, and new regulations.

BBA chief executive Angela Knight said: “The recession has made it harder for all economic activity to take place. Many other lenders have simply exited these difficult markets, but the UK’s high street banks continue to offer attractive rates on mortgages, as they do on savings, as competitively as they possibly can.”