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Is competition reducing in the UK mortgage market?

The Council of Mortgage Lenders (CML) has today confirmed that UK mortgage lending fell by 28% in the last year. However it is the revelation that the market is dominated by fewer mortgage lenders than just one year ago which is causing some concern amongst consumer groups and homeowners.

The top six mortgage lenders in the UK accounted for over 78% of new business in 2008 which is an increase from the 72% seen in 2007. While in many ways this was inevitable as the stronger mortgage lenders were able to continue operating at reduced business levels, while many of the smaller operations went under or were forced to merge with competitors, what does this mean for the future.

The largest mortgage lenders in the UK in 2008 were the old culprits such as Lloyds bank, Santander, Nationwide, Barclays, Royal Bank of Scotland and HSBC although it was the demise of Northern Rock (which fell out of the top five) which further confirms the difficult trading the tax payer owned operation is currently experiencing. It is unclear as to whether competition will increase in the UK mortgage market, outside of the top six, as and when the market recovers although hopefully we will see the re-emergence of specialist and niche mortgage lenders in due course.

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