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August 2009

Mortgage Volumes for July

The recent Council of Mortgage Lenders’ figures showed gross mortgage lending totalled an estimated £16 billion in July, a 26% increase from £12.7 billion in June but down 36% from £24.9 billion in July 2008.

This appears to confirm my own view that we are starting to see a slight improvement in the lending market, however activity remains significantly down on historic levels. For example this is still the lowest July lending figure since 2001 and £11 billion lower than the July average over the previous seven years.

Who is number one in the mortgage market?

The Council of Mortgage Lenders' (CML) table of top mortgage lenders shows Lloyds Banking Group (which comprises Halifax, Bank of Scotland, Lloyds and C&G) as the top mortgage lender in the UK with a 30.3% share of the market.

This came as something of a surprise to me as the Halifax in particular have not been offering any competitive products recently. Barclays/Woolwich on the other hand have been at the top of the best buy tables for some time now and are continuing to aggressively acquire market share. Perhaps this will be reflected in the end of year figures?

What is certain (and slightly worrying) is that recent consolidations in the mortgage market have meant that the largest five lenders last year are now responsible for almost three-quarters of all new lending.

In all there were no fewer than seven mergers and transfers of engagement in the mortgage market, as well as partial transfers of mortgage assets. The highest profile consolidations were in the banking sector, with the formation of the Lloyds Banking Group. The second largest lender Santander, have already taken over the Abbey brand and added the Alliance & Leicester mortgage book last October.

In the building society sector, there were transfers of engagement, which saw the Cheshire and Derbyshire building societies merge into the Nationwide Building Society, and which brought together the Scarborough and Skipton, the Catholic and Chelsea, and the Barnsley and Yorkshire building societies.

A reasonable choice of lenders is essential if the market is to remain competitive, otherwise we risk the lenders forming some sort of unofficial “cartel” where they all get together and price mortgage products to suit their profits rather than to benefit their customers…

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