Mortgage rates in the UK are now roughly the same as they were a year ago, raising hopes that the housing market could start to recover from the impact of the credit crunch.

According to price comparison site Moneyfacts, the average two-year fixed deal is now 6.59% compared to 6.56% in August 2007 and down from 7.08% in July.

But the website warned that mortgage arrangement fees remained high - at an average of £964 compared to £803 in August 2007 - while lenders were also insisting on an average 20% deposit for new lenders.

Just two lenders now offer 100% mortgages, compared with 33 a year ago, the research added.