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Urgent Stock Market Message

UK Mortgage Market Competition Ramped up in 2016

Housing-Market / Mortgages Dec 12, 2016 - 12:38 PM GMT

By: MoneyFacts


Moneyfacts UK Mortgage Trends Treasury Report data, not yet published, highlights that there has been significant improvement amongst the lenders who have 80%* share of the mortgage lending.

The true rate** combines the product fee with the initial interest rate to produce a single percentage figure.

Charlotte Nelson, Finance Expert at Moneyfacts, said:

“2016 saw competition in the mortgage market ramp up, with some of the biggest lenders seeing a cut to their average true rate of as much as 0.62%. With the average two-year fixed true rate at 75% loan-to-value (LTV) standing at 2.25% in December, all but one of the main lenders in the top ten are better than average, meaning borrowers are significantly better off today than at the start of the year.

“These providers, who represent 80% of the market share, are not just relying on their popularity. Instead, they are leading the charge with rate cuts and intense competition, leaving the rest of the market with the choice of either following suit or being left in the dust.

“The rate gap between the 75% and 90% LTV deals has been a mixed bag, with the biggest groups at the top of the lending table choosing to increase the gap, showing that these lenders were focused on the less risky lower LTVs. Interestingly, the second half of the top ten have narrowed the gap between these two sets of LTVs, perhaps indicating that these providers were trying to diversify in an attempt to appear the most attractive to these borrowers and grow their mortgage book.

“This year has been filled with economic uncertainties, from whether the base rate was going to go up or down, to the EU referendum. Throughout, the competitiveness of the mortgage market has remained, with all average rates falling consistently to record lows. Next year looks even more uncertain, and with inflation predicted to rise to 4.00% by the end of next year, we could possibly see the record low rates come to an end.”

The Moneyfacts UK Mortgage Trends Treasury Report, out later this month, provides an in-depth monthly review of today’s changing mortgage trends, including all the relevant facts on the UK’s residential and buy-to-let markets.

*Source: CML

**Figures based on an advance of £150,000 over the initial rate period. - The Money Search Engine is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.

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