MORTGAGES
Lending in trouble?
Could banking issues on the Costas really affect lending in the UK? Yes it really could says Andrea Kirkby.
Y
ou might think the woes of the Spanish economy have little to do with the UK housing market. After all, if they’re bulldozing flats
on the Costas, that’s not going to affect the price of a flat in Walthamstow, is it? Think again. Moody’s just downgraded the credit
ratings of a whole swathe of Spanish banks, including a two-notch downgrade of Santander, which remains on negative outlook. It also downgraded Santander UK from A1 to A2, again with negative outlook. So Santander UK is under pressure – and it’s now scaling back its lending to the mortgage market. Santander’s market share is estimated to
have fallen from 25 per cent to 14 per cent in the last few months, and it could fall further if the eurozone crisis continues. That’s a big slug of the UK mortgage market left unsupplied, and could make mortgages much more difficult to get if other lenders don’t step into the breach. Brian Murphy, Head of Lending at
Mortgage Advice Bureau, says, “Santander’s appetite is far less than it has been in the past couple of years. We had written £150 million with Santander by this time last year – this year it’s only £98 million, but we
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are busier overall than we were then.” He believes Santander wants to trim its lending from around £23 billion last year to nearer £18 billion this year – quite a cut. He also notes that while Abbey was one of the first lenders to offer exclusive products for brokers when the market returned to growth in 2009, it now has not a single exclusive product on the market. According to Ray Boulger, of broker John
We had written £150m
with Santander by this time last year. This year it is just
£98million.’ BRIAN MURPHY MAB
42 JULY 2012 PROPERTYdrum
Charcol, Santander tightened its lending criteria up considerably in February. At the same time, it’s stepped back from offering competitive rates. That’s meant his firm is now placing only 4-5 per cent of its business with Santander – instead of over 10 per cent – and other brokers have had the same experience. “When a lender of this size pulls in its
horns,” he says, “it reverberates around the whole market.” Other lenders were swamped with applications, and many increased their interest rates to try to stem
When a lender
the size of
Santander pulls in its horns it reverberates around the whole
market.’ RAY BOULGER JOHN CHARCOL
the flood; others saw delays in processing new applications. But John Heron, managing director of
Paragon, says “Santander may be pulling back, but it’s not the only one.” Other major lenders are also trimming their commitments. Lloyds Banking Group has reduced its
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