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Across the world mortgage lenders compete fiercely for customers, none more so than in the UK. The UK industry offers a wide variety of different mortgages, as many as 4000 different products exist for its UK customers. The UK mortgage market is regulated by the Council of Mortgage Lenders and by the independent financial body, the FSA (Financial Services Authority).
Commonly sought after mortgages are those with variable rates. This rate can be calculated by the lenders and is known as the Standard Variable Rate, or the Tracker rate can be used which is calculated from the Base Rate offered from the Bank of England.
Due to the current economic climate the UK mortgage market has appeared to slow during the previous two to three years. Come November 2005 however the industry seemed to be improving with a net lending growth of £5 billion. This figure more than suggests that the mortgage market is on the mend. Mortgage experts believe that by the year 2010 the market will see an estimated 13% increase which points to a figure of £324 billion.
Low cost fixed-rate mortgage currently dominate the market but mortgage lenders are set to offer even more home financing products to the growing number of customers. Banks and building societies appear to be reducing rates even lower than that recommended by the Bank of England.
An estimated 80% of the mortgage market is taken up by requests and applications for fixed rate products, with most being low cost fixed rate mortgages. In order to counterbalance for these low cost mortgages lenders are imposing extreme early repayment penalties.
As you may be aware these charges are not advertised alongside the great deals on offer. You will realise that these penalties only become known once you’ve applied. Some lenders are charging 5% on the borrowed amount until 2012, and some are charging that little bit extra at 6%.
A new product on offer at the moment is a fixed rate portable mortgage. This type of loan allows the borrower to transfer the mortgage from one property to another. Obviously you will pay the existing mortgage but you may need to pay extra if more money is borrowed to purchase another or a more expensive property
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