There is little doubt that the mortgage market in the UK is still reeling from the havoc caused by the global credit crunch, which made its way across the Atlantic last summer, leaving a trail of destruction in its path. The mortgage industry has been suffering for a year now, with lenders unable to raise funds to finance their mortgage lending operations, and consumers unable to get the finance that they need to buy a property, thus leading to ongoing problems in the housing market.

There have been a number of high profile victims of the global credit crunch both in the UK and the US, including Northern Rock, Lehman Brothers, HBOS, and US mortgage giants Freddie Mac and Fannie Mae. However, a recent report has suggested that competition in the mortgage market within the UK could actually be increasing, and this could mean great availability and greater affordability for consumers.

Although the base rate in the UK has remained on hold since April of this year, there has been a drop in the swap rate, which is the rate at which banks lend to one another, and this has increased liquidity somewhat and resulted in many lenders dropping the interest rates on some of their mortgage products. In addition to this officials report that a number of smaller players are also returning to the mortgage market and offering competitive deals, which will further help to increased competition and availability.

However, consumers still face problems with regards to arrangement fees and deposit levels. Many lenders are still demanding higher than average deposits from borrowers in order to get access to their best rates, and many others are charging high arrangement fees on their mortgages, which consumers should look out for.

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