Cat Standard Mortgages

CAT Standard Mortgage Lenders

Although many mortgage providers still pay lip service to CAT Standard Mortgages, very few are marketing them actively, at present. Instead, what some lenders appear to be doing is incorporating some of the CAT Standard rules in order to promote their mainstream mortgage products, whilst not necessarily adhering completely to the CAT Standard.

For example, many mortgage lenders have introduced Tracker mortgages as an alternative to standard variable mortgages. A typical Tracker mortgage might be offered at 1 percent above the Bank of England base rate. If the Bank of England base rate were to increase, then there would be a corresponding rise in the Tracker rate. Similarly, if the rate were to fall, there would be a corresponding decrease in the Tracker rate.

Financial institutions are also offering a wider range of fixed rate mortgages than they did previously. Many lenders offer fixed or capped rate deals for two, three or even five year periods.

Increased Competition in the Mortgage Market
Some commentators would argue that the presence of the CAT Standard has encouraged lenders to develop additional innovative mortgage products, giving borrowers a broader range of available options.

As a result of increased pressure being applied to their profit margins, mortgage providers are being forced to attempt to improve their profitability in other ways. Because borrowers have become amenable to re-mortgaging their homes and changing mortgage lenders more frequently, one common method has been to increase penalties on borrowers who repay their mortgage loans early. This particular tactic breaks the CAT Standard rules, but some mortgage providers have been forced into this course of action because they are becoming increasingly concerned about their ability to retain borrowers for long enough to make a decent return from the mortgage products that they are offering.