Mortgage Market in the UK
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UK Mortgage : The mortgage market of UK is one of the most sophisticated mortgage markets in the world.
UK Mortgage : The mortgage market of UK is one of the most sophisticated mortgage markets in the world.
The UK mortgage market offers a choice of around 4,000 products to customers. It is one of the most competitive where there is a growing need for lenders to devisewinning strategies. However in such types of markets innovation is proved to beone of the determining factor in differentiating the winners and losers in thefuture.
Market of UK mortgage is a top most innovativeand competitive market in the world. The Mortgage market of UK differs in comparison to the other countries inthe ground thatthere is nointervention in the market by the state or state funded entities.
Due to the poorer economic conditions, the mortgage market in UK has contracted more in 2005 thanpredicted before. There was a general slowdown in the total secured lendingmortgage market for the year 2004.The progression of the buy-to-let mortgagemarket in terms of market share from 2003 to 2004 was the lowest observed (0.6 percentage points compared to 1.3 percentage points) in the previous period. This slowdown was especially felt by Hamptons Estate Agents London.
Making a better customer relationships Lloyds TSB gained market share in 2004 and moved intosecond place in terms of gross advances. In contrast, Barclays was the onlylender in the top ten to witness a decline in both its mortgage book and itsnew mortgage business in 2004.
Process Of Mortgage In UK
In the Mortgage market of UK, lendersusually charge a valuation fee, which pays for a chartered surveyor to visitthe property and ensure it is worth enough to cover the mortgage amount.Suchtype of survey is not a full survey .That is why it may not identify all thedefects that a house buyer needs to know about.Even it does not form a contractbetween the surveyor and the buyer.
Mortgage Lending In UK Presently
According to the figures from the Major British Banking Groups netmortgage lending in November-2005 rose by an underlying £5.1bn; the strongestrise since July 2004. It is much higher than both October’s rise of +£4.3bn andthe average of +£4.4bn over the previous six months .A lower growth is beingmarked in overall unsecured personal lending. Both loans & overdrafts haverisen by just £0.1bn, on the recent average (£0.4bn).
BBA director of statistics, David Dooks have said that,”November’s above-average rise in mortgagelending has truely reflected the recent upturn in approvals and provides moreevidence that the mortgage market bottomed out in the summer and is now beingunderpinned by steady demand”.
Some Mortgage Types In UK
In case of Repayment mortgages each monthly paymentpays off a little of the underlying debt, as well as interest on the loans.After the completion of the term the mortgage is then cleared.
In Case of the Endowment Mortgages an endowmentpolicy is provided to life insurance and save funds to repay the loan at theend of the term (Generally 20-25 years). If the investment performs badly, thena shortfall is faced on your loan at the end of the repayment period.
Individual Savings Account (ISA) mortgages work onthe same principle as endowments, but an Individual Savings Account is used asthe loan repayment method. If your investment performs badly you could face ashortfall at the end of the mortgage term.
Pension mortgages are similar to both ISA andendowment mortgages, but work on the basis that pensions provide tax-free cashon retirement. After the end of the mortgage term the loan is paid out of yourtax-free lump sum.
Interest Rates On Mortgages In UK
The interest rates on any mortgages are not different only the range of options offereddiffer.
Variablerates– Here youhave to pay the continuing rates on your loan. The mortgage rate changes everytime interest rates change. Whatever may be the kind of mortgage you startwith, it is likely to change to variable rates at some point of time
Fixedrates– Here theinterest rate is fixed for the period agreed – often two to five years
Cappedrates – Theseare fixed, but if rate falls you have to pay the lower rate. Such deals can bea good for budgeting.
Cashback deals -This is when lenders offer money back if you take out a particular product.
Discountedrates – In suchtype of mortgages the borrower is offered a discount off the lender’s variablerate. The rate paid will fluctuate in line with changes in the variable rate.
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