The steady increase of the Bank of England base rate over the past twelve to eighteen months has gently eased the rampant property market. Buy-to-let investing has begun to fall out of favour with novice investors and potential first-time-buyers have had to put their plans on hold as the cost of borrowing becomes too much to bear.

While the steady increase in interest rates has cooled the jets of the UK mortgage market to some degree, it is the events of the US sub-prime mortgage industry that has finally caused mild panic across the pond.

It is safe to say that the sub-prime issue has not thrown the UK mortgage market into complete chaos, however it has, for the first time in many years, cast some doubt as to the future fortunes of the industry. For the first time in many years is has become difficult to predict the future of financing residential property in the UK.

Some analysts are predicting it will be harder to get a mortgage in the UK over the next few years. This is because at least one major lender and several smaller ones have already fallen afoul of the industry regulator and have either had to be bailed out by the Government or have closed their doors permanently. The theory is that with fewer mortgage lenders in the market, fewer products will be available to UK home owners.

The problem with this theory is that the analysts are assuming the UK mortgage market is supply driven. In other words, if there are fewer mortgage products to choose from then fewer people will apply for one. It follows then that the mortgage market will experience a slow down in the UK. It may not be the case, however, that the UK mortgage market operates this way.

People still need somewhere to live and most UK residents dream of owning their own home. This has led other analysts to the theory that the causalities of the relatively minor fallout from the US sub-prime mortgage problem will simply be replaced by their competitors. In other words, the demand for UK mortgage products will remain fairly stable and the supply of mortgage products will be replaced by other lenders.

It is likely that applications from first-time-buyers will decrease, however, as lenders pull products from the market that are tailored to this particular type of borrower. This is because they represent a risky investment for lenders so it is likely they will be one group of borrowers to experience a reduction in supply.

Other types of borrowers shouldn’t feel the pinch as much. The market for remortgages and buy-to-let mortgages should remain relatively strong despite the turmoil in the US mortgage market. While it is difficult to predict exactly what path the UK mortgage market will take in the short to medium term, it is safe to say that there will be more uncertainty to come.

The market for UK mortgages has greatly expanded over the past few decades. In the past there were only a few high-street lenders who offered mortgages in the UK. Today, however, there are thousands of different UK mortgages available from dozens of different lenders – many of which are specialist lenders operating in niche markets. The UK mortgage market is also one of the most competitive markets, in which the need is for ever growing especially for lenders to come up strategies that attract even more consumers. In this background, innovation is ultimately the deciding factor, the one that differentiates the winners from the losers.

Applicants of UK mortgages now range from standard, full-status, clean credit individuals, to those who may be unable to prove their income or who may suffer from adverse credit. In addition to the vast array of UK mortgages available to individuals seeking finance for their own homes, there is an increasing range of buy-to-let mortgages on offer to property investors.

The process of Mortgage market in UK has lenders charging a valuation fee for a chartered surveyor. The surveyor visits the property and makes sure that the real estate is worth just enough so as to cover the mortgage amount. This however, is not a full survey. Such type of survey is not a full survey, which is also the reason this first survey is unlikely to identify all the defects a real estate buyer has to be aware of.

There are different types of mortgages in the UK:

• Repayment mortgages- paying off a little of the debt, each month, as well as interest on the loans. After completion the mortgage can be cleared.
• Endowment Mortgages- provided to life insurance and saving funds to pay off the loan at the end of the term, 20-25 years.
• Individual Savings Account (ISA) mortgages- similar to endowments, such an Individual Savings Account is used as the method to repay the loan.
• Pension mortgages- like both ISA and endowment mortgages, these mortgages work on the concept that on retirement pensions provide tax-free cash and so the loan is paid out of that tax-free lump sum at the end of the mortgage term.

It is fair to say that the market for UK mortgages has become very large and extremely complex and for this reason professional advice should be sought from an independent mortgage broker or IFA in order to help you select the right UK mortgages based on your individual circumstances.
Borrowers should also be aware that the market for UK mortgages is regulated by the Financial Services Authority in order to offer borrowers protection against unscrupulous mortgage brokers. If mortgage applicants feel their mortgage broker is not acting honestly, they should contact the FSA for advice. UK residents should also note that whilst most UK mortgages are regulated by the FSA, buy-to-let mortgages are not.