The mortgage industry has changed in the last year and there are still more changes to come. The credit crunch from the US reached our shores last year creating issues with many individuals who had fixed rate mortgages ending in 2008. Due to the fact that the banks were struggling with the subprime market many decided to close certain products for a time like the 100 percent mortgages. Furthermore many banks and building societies stopped taking new applications and started rejecting more of the applications they did receive.

The mortgage industry has placed heavier guidelines on who they will loan money to. The credit scores need to be up and anyone seeking a loan must make a deposit and pay for the arrangement fees out of pocket rather than rolling it into a loan. Today more news was released about changes in the British mortgage market.

Individuals who have fixed rate mortgages are going to find it tougher to get remortgages that offer a great rate. The new fixed rate mortgage products on the market have just hit a ten year high and the rates will continue to rise according to the analysts.

The average fixed rate mortgage for 2 year duration is at 6.75 percent. The reason for these high rates has to do with the swap rates. The Bank of England’s base rate is still low as they try to combat the credit crunch; however the swap rates are not lowering on the fixed rate loans. Therefore, the consumer is not seeing the savings of the lower base rate, and it looks like the cost will continue on this steady climb upwards.

The swap rate last Friday was 6.49 percent. Many lenders have to pay this price and then make a profit off of the loans they offer, which means they are going to make the fixed rate higher than what they had to pay for it. Any mortgage toolbox is no longer going to have a mortgage at 6 percent or below. These will be taken from the market perhaps forever or just long enough for the economy to improve.

Even rates on the secure cash for lenders have increased by .44 percent in the last month. Francis Ghiloni is a development director who believes the sub 6 percent fixes will survive, but the arrangement fees are going to be higher. In other words the lenders may keep the 6 percent mortgages after a time, but this is because the profit margin is higher on the arrangement fees to make up the losses they would sustain for offering those products.

Halifax, Nationwide, Abbey, Woolwich, Lloyds TSB, and Cheltenham & Gloucester have all changed the products they are offering on the mortgage market. They have stopped offering the SVR’s to new consumers, and only allow those remortgaging the products. The changes will directly affect the other mortgages by increasing the interest rates as well as the arrangement fees. For consumers needing a loan it is best to have savings put aside before attempting a mortgage at the moment.