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Credit outlook bleak for mortgage lenders

The credit outlook for the UK’s largest mortgage lenders is bleak following falling profit margins according to rating agency Moody’s Investors Service.

In its annual review released this week the agency says lenders face increased competition, growing financial awareness among consumers and technological advances that allow in low cost competitors.

The agency claims competition has forced lenders to abandon some elements of mortgages which made them most profitable, such as tie in periods and requirements to purchase other financial products.

Furthermore, competition has forced them to raise interest rates offered to long term savings.

The agency also warns that concerns about endowment selling pose a risk to the credit quality of mortgage leaders.

Although regulators do not seem likely to require compensation for consumers mis-sold endowment mortgages media interest in them increases the risks.

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