Will competition in the mortgage sector continue if business does not pick up?
In a classic chicken and egg situation we have seen significant competition return to the UK mortgage sector as lenders bank on a recovery in the UK property sector in the short to medium term. While this is just the tonic that property buyers requiring in the UK, there are concerns that unless we see a significant increase in property purchase activity some of the more generous mortgage deals on offer could disappear.
Despite the fact that the UK government is placing significant pressure on UK mortgage lenders to increase liquidity across the board, they can only do this on a long-term basis if activity levels increase and they are actually allowed to make profits on their various mortgage offers. Unless we see a follow-through in the property market there is every chance that rates could slowly creep higher yet again until we see buyers return to the market en masse.
Over the last few days we have seen a number of first-time buyers expressing concerns over the significant deposits which are required to enable them to take advantage of various offers on the market. While there is no doubt that competition has returned to the mortgage market we will only see a significant increase in property market activity once deposit levels begin to fall.
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