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Mortgage market shakeup could lead to loan changes
Tue, 02 Feb 2010
With several major building societies already increasing mortgage rates, it is clear that the mortgage market is undergoing a major shake-up. For those borrowers looking for a new mortgage loan, there may now be more options on the market.

Earlier this year, the UK mortgage lender Skipton Building Society raised its standard variable rate, causing significant increases to the amount owed by mortgage borrowers on their books. Skipton are reportedly suffering due to more difficult market conditions and competition from overseas banks, UK government-support banks and the UK Government National Savings and Investments .

Despite the change, the SVR can have little influence on borrowers seeking a new mortgage . Ray Boulger of John Charcol mortgage brokers reportedly commented: "Most lenders don't allow new borrowers to start off on SVR and the few that do have a high SVR. Therefore the choice is primarily between fixed and tracker . A few lenders offer a discount off their SVR, but these deals are uncompetitive compared with trackers. Trackers offer better value, particularly lifetime trackers, than fixed rates at the moment because I expect bank rate to remain below 2.5% for at least three years in view of the dire state of the UK economy and the significant differential of 1 to 2.5% between the initial rate on a tracker and a fixed rate ."

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