How the UK Mortgage Market Works: Lenders, Rates and Regulation

The UK mortgage market was once dominated by building societies. Their share of new mortgage lending fell sharply from 96% in 1977 to 66% by 1987, as banks and other lenders expanded. Today, banks, building societies, specialist mortgage firms, insurers and pension funds all provide home loans. Variable-rate mortgages are more common in the UK than in the United States. Lenders rely heavily on retail savings deposits, so they often prefer rates that can change over time. However, many borrowers can fix their interest rate for an initial period of two, three, five or sometimes 10 years. UK borrowers are generally liable for outstanding loan balances even after a property is repossessed and sold. The sector is regulated by the Financial Conduct Authority, while the Prudential Regulation Authority oversees lenders' financial stability. Both regulators were established in 2013 following lessons from the 2008 financial crisis.

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