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Competition returns to the banking sector for now

While retail sales continue to grab the headlines in the UK it is becoming more and more noticeable that many UK banks and mortgage providers are offering their own special discounted rates. In a bid to inject more life and competition into the UK property sector it appears that the mortgage arena is now more competitive than it has been for the last two years. However, is everything as it seems?

A number of companies have announced significant discounts to their standard variable rates on mortgages, and these make very good reading for those looking to trade up in the property market or indeed enter for the first time. However, it must be noted that many of these deals have time constraints and indeed many are directly linked to the standard variable rates currently on offer. There is nothing to stop mortgage lenders in the UK from increasing their standard variable rates in the short, medium or longer term which would have an immediate impact upon these "discounted deals".

As ever there is a need to be cautious when committing yourself to any mortgage arrangement or any long-term financial package. You need to be aware of the potential pitfalls if the market changes and indeed if standard variable rates do move in the short to medium term. Stretching yourself to the limit on a discounted rate could end up being financial suicide in the end!

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