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UK mortgage lenders set to experience more pressure

As the UK government bond market continues to rise, with bond yields having fallen to around 0.785%, there are growing hopes that UK mortgage lenders will start to reduce their rates. It seems that more and more investors have now come round to the idea that UK base rates will remain at 0.5% for some time to come and ultimately the cost of finance in the UK should fall accordingly. But will UK mortgage lenders play ball?

Despite the fact that mortgage rates in the UK "should come down in the short term" there are real fears that UK mortgage lenders will refuse to reduce their rates. They will argue that increased finance costs over the last few months have played havoc with their profit margins and record numbers of UK homeowners will fall into mortgage default over the next few years. Whether these are valid arguments against a reduction in UK mortgage rates, which would undoubtedly increase activity in the UK property sector, is open to debate.

The UK mortgage market is proving a very difficult nut for the UK government to crack despite the massive pressure placed on the leading UK mortgage providers to reduce their profit margins and reduce rates.

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