Mortgage market less profitable
The mortgage market is going through a rough time at present and there are speculations that the whole set up is due for a big change in the coming months.
Financial providers who offer mortgage products have found there has been an increase in competition and a decrease in the profitability of mortgages over the past few years. Apparently banks make about 1-2% profit on mortgages, but the extra competition has forced many lenders to cut this further to a measly 0.7%, in a move to gain more customers.
It is not only mortgage lenders who are feeling the pinch, but homeowners too who are now paying the highest interest rates in 9 years.
However despite profitability for mortgage lenders going down, it is not all doom and gloom for homeowners, as the Bank of England is expected to drop its base rate again so the actual cost to consumers should fall with it.
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