New Mortgage Lenders to Enter the UK Market

British mortgage brokers believe that entrance of new mortgage lenders on the British market will result in increased competition.
GE Money Home Lending, which was one of the most popular British mortgage lenders in 2007, announced that this week it will re-enter the UK mortgage market, which it left last year. GE Money Home Lending has already revealed one of the mortgage deals it will offer to its customers: the best buy mortgage offer available for 70% loan-to-value ratio will have an interest rate of 4.99% and a fee of £995. Other mortgage deals include a 2-year fixed-rate deal offered at 5.59%, and a 3-year fixed-rate deal at 6.04%; both deals come with high arrangement fees that reach up to £1,995 and are only available for purchases of houses worth £500,000 or less.
Although UK mortgage brokers warmly welcomed the entrance of GE Money Home Lending onto the mortgage market, they expressed disappointment with the deals, which are to be introduced by the lender. The interest rates, according to brokers, are far from competitive, while new players on the mortgage market are supposed to increase competition.
Another lender that is expected to come onto the mortgage scene in the UK is Tuita; it will announce its mortgage deals later this week.
Aaron Strutt, a mortgage broker, believes that entrance of new lenders on the UK mortgage market oftentimes results in pressure on high street lenders that, in its turn, causes them to reduce interest rates even if competitors’ rates are high.
According to estimates, the number of mortgage deals in the UK grew almost by 100 in 1 month, from 2,229 in September to 2,302 in October. However, the figures are still 20% lower than at the same time last year and far behind the pre-recession level, when as many as 28,000 mortgage deals were available to UK borrowers.