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London Property Guide for 2012
Several major banks and lenders increased their influence in the UK home loan market last year, according to the most recent data from the Council of Mortgage Lenders (CML). The top six are led by the Lloyds banking group and accounted for 78 percent of all new loans in 2008, compared to 72 percent in 2007. Following Lloyds, the biggest lenders were Santander, Nationwide, Barclays, RBS and HSBC. Overall, new lending fell by 28 percent in 2008 and a number of lenders were driven out of the market.
Northern Rock had accounted for 8 percent of all new lending in 2007, but it became insolvent that same year. In 2008 it dropped out of the top ten lenders and had just 1.1 percent of all new loans. Additionally, a number of smaller, specialized mortgage lenders went out of business or simply stopped lending. These specialist lenders, which do not depend on savers’ money to finance the lending, had a market share of 7 percent in 2007, and that was down to 2 percent in 2008.
With fewer lenders in the market, and less money to lend, that means there is less competition, not to mention less money available for buyers. There was also a flurry of takeovers over the past two years as home values fell and defaults rose. Lloyds TSB took over HBOS, Santander took over the Abbey and the Alliance & Leicester. Among building societies, Nationwide took over the Cheshire and the Derbyshire building societies. There were also a number of mergers, and there may be still more to come.
The CML noted that “We may not have seen the end of the current wave of consolidation. So, next year’s table is likely to look different again, with more new names and an even larger market share in the hands of the largest firms.”
© Housing Market News by The Little House Company
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