First Direct's re-entry into the mortgage market may look like a vote of confidence that the worst is finally over for homeowners, but the numbers tell a different story.

The internet bank has introduced higher rates and on some deals, higher fees.

Seven weeks ago, a borrower could get a two-year fixed rate at 4.75 per cent with a £1,498 fee. Today, the equivalent deal comes with a rate of 5.76 per cent, a £1,499 arrangement fee and a £499 booking fee.

Over two years, the extra cost on a £150,000 interest-only loan would be £3,524. Hardly encouraging, and yet ironically, this new deal is still one of the most competitive around, which demonstrates just how much the mortgage market has deterioriated since First Direct ran for the exit.

It's natural to want to cling to positive signs - a lot of money rides on remortgaging at the right time. Recent rate cuts on some deals by Abbey, Halifax and Nationwide might have prompted some to postpone their search for a new deal in the hope that lower rates are still to come.

But second-guessing could be costly. The cuts are modest compared with the huge increases that preceded them, and the money markets that determine fixed rate lending are still volatile. First Direct's decision could be just one of many false signs of hope that a recovery has begun.