The Bank of England kept the benchmark interest rate at 0.5 percent this month and extended its asset-purchase program to help pull Britain out of its worst recession in a generation.

U.K. house prices rose at their fastest pace in more than 2 1/2 years in August as low interest rates spurred demand and a lack of properties for sale underpinned values.

The increase in house prices this month was the fourth in succession, leaving them over 3 percent higher than at the end of 2008, according to a UK Building Society. In the three months through August, they rose by an average of 3.3 percent from the previous period, the most since February 2007.

Britain’s six biggest banks approved more home loans in July, a sample from the Bank of England’s lending panel showed on Aug. 20. U.K. mortgage approvals rose in July to the highest level since February 2008.

The average cost of a home climbed 1.6 percent, the most since December 2006, to 160,224 pounds. Economists predicted an increase of 0.5 percent, according to the median of 17 forecasts in a survey. From a year earlier, prices fell 2.7 percent.

The entire world began to feel a financial crisis in the summer of 2008. While some people claim to have predicted it to happen, and those of us working within the mortgage industry knew eventually the bottom would fall out, we do not think the world was ready for the rapid decline that happened.

It is a proven fact that banks are not lending money to individuals for mortgages at the level they were a year ago. In addition to a lack of lending, there are also fewer products available in the consumer mortgage market. The positive news for the short term is that those people who have a variable rate mortgage have seen their mortgage bill drop, as the Bank of England has currently set the rate at an all time low of 0.5%. While this is bad news for those hoping to earn interest from savings, it is positive news for those with a variable rate mortgage.

To make matters worse, the press and the media continue to harp on about the Credit Crunch. The media continues to print gloom and doom stories that do nothing more than paint the bleakest picture imaginable, no matter if they are factually true or not. The worst part of the situation is that consumer confidence is based around what is read in the newspapers and what is seen on TV. The media is one of the only ways that people not directly involved in the credit crisis gets information on the state of the economy. Misleading information can be the route of serious consumer doubt, which only hurts the economy more.

Of all the mortgages available today on the UK market, the two most popular types are the standard variable rate mortgage and the fixed rate mortgage.

There are other mortgage products available that also come under the umbrella of a variable rate mortgage, such as a base tracker mortgage or a discounted mortgage.

If you are new to the world of mortgage it may be difficult to decide which mortgage to opt for, and there are pros and cons to both variable and fixed rate mortgages.

When deciding whether to opt for a variable or a fixed rate deal it is important that you consider the pros and cons of both so that you can make a more informed decision with regards to which type of mortgage will prove most suitable for your needs and pocket. Your mortgage is an important long term commitment and in order to avoid hassles and additional costs it is important that you get it right first time.