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UK mortgages rates increase further

Many people cannot understand how the UK mortgage sector continues to push rates higher and higher despite the fact that interbank rates and base rates have shown no signs of increasing. The announcement that the rate on a mortgage tracker with a 25% deposit has increased from 3.86% in April to 3.99% in May would appear to be nothing more than an increase in profit margins for the sector.

We've also seen an increase in five-year fixed rates with a 25% deposit from 4.87% in April to 4.92% in May. While these small average increases may seem fairly irrelevant to some people they do no less indicate a continued upward trend in UK mortgage rates despite the fact that interbank rates have fallen slightly and UK base rates have remained at 0.5% for some time. If this is the mortgage sector's idea of attracting new business it is a very strange way to catch the attention of would-be first-time buyers!

The UK mortgage sector is effectively a law unto itself and despite repeated attempts by the UK government and the UK regulator to clamp down on anti competitive activities, there appears very little the authorities can do in practice. In many ways UK banks are effectively robbing Peter to pay Paul by increasing their margins in profitable areas and reducing their business levels in low margin or non-profitable activities - either way it is yet again the consumer who suffers.

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