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Are regulators powerless to control UK mortgage providers?

The Daily Mail investigation which alleges that the average UK mortgage is now £1800 a year more expensive than it should be, due to the fact that UK banks have yet to pass on significant cost savings, has put the UK regulators back in the spotlight. While the UK government, and indirectly the UK taxpayer, continue to invest millions and millions of pounds into the regulatory regime governing the UK financial system, how is it that UK mortgage holders have yet to see any benefit?

There is real concern that despite significant investment into regulators such as the FSA, UK mortgage providers are in effect a law unto themselves. The fact that the UK government has had to go public with the arguments it is using now, and has used in the past, would indicate a lack of strength to push through any changes by itself. As we have mentioned on numerous occasions, UK mortgage providers very much hold the Ace cards with regards to the recovery of the UK economy although consumer demand will at some point see mortgage rates fall further back into line with base rates.

However, with dramatically reduced mortgage applications, a property market which has yet to recover and a lack of depth in the money markets, we are unlikely to see any significant reduction in mortgage rates in the short term.

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