Fewer lenders dominate home loans

Six mortgage lenders increased their hold over the market for new UK home loans in 2008, according to Council of Mortgage Lenders (CML) data.

Buyers have a far smaller choice of mortgage deals than before

 

The top six, led by the Lloyds banking group, accounted for 78% of all new loans, compared to 72% the year before.

The CML said the credit crunch, which started in 2007, had dried up the supply of mortgage finance.

Overall new lending fell by 28% last year, with some specialist lenders being driven out altogether.

“The lending community itself has undergone… dramatic changes,” the CML said.

“With so many lenders either merging or ceasing lending, this year’s largest lenders’ table has changed more than in other years,” it added.

Driven out

A key factor was Northern Rock dropping out of the top-ten mortgage lenders as a result of its insolvency in 2007, when it accounted for 8% of all new lending.

In 2008 it lent just 1.1% of new mortgage funds.

But the CML said another factor was that specialist lenders – those which did not depend on savers’ money to finance their lending – had fallen from a 7% share of new lending to just 2%, and of a much smaller market.

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