Top 6 Lenders losing market share31 Jul 2015 20:44
The top six lenders are losing market share to smaller players as they have been slower to relax their criteria post-MMR, say brokers.
In the months leading up to the MMR, in April 2014, there was a general tightening of criteria across the market, especially in areas like interest-only, self-employed and lending into retirement.
However, in recent months many smaller lenders have loosened their criteria in these areas, which has seen them steal business off the bigger lenders.
This has been highlighted in the half-yearly reports published so far.
Overall, lending was down from £97.6bn in the first six months of 2014 to £96.6bn in the first half of this year.
And of the results released so far, it is evident the bigger lenders are losing ground to smaller market participants.
Royal Bank of Scotland, Lloyds and Santander have published their mortgage lending figures so far and all of them experienced a year-on-year decline in lending. RBS’ lending is down 7.1 per cent, Santander’s is down 7 per cent and Lloyds’ is down 19.1 per cent.
Just a very small proportion of the smaller lenders have published their lending figures but, of the ones that have, lending has increased significantly. Virgin Money has experienced a 44 per cent year-on-year increase in lending, Skipton’s lending is up 31 per cent, Coventry’s is up 25 per cent and Paragon’s is up 98 per cent.
Brokers believe smaller lenders have been quicker to loosen their criteria post-MMR and are reaping the rewards for doing so.
Chadney Bulgin mortgage partner Jonathan Clark says: “I think the smaller lenders are more fleet of foot at the moment and are able to adapt and change quicker. We are doing more now with niche lenders and we are getting approached by them all the time.
“The big six are slowly reacting and are making some changes but not quickly enough, clearly.”
Trinity Financial products and communications manager Aaron Strutt says: “The bigger banks have said to us they are losing deals to some of the smaller lenders. There is a lot more competition in rates and criteria. Not everybody can tick all of the boxes with the big lenders, so then you would probably go to one of the lenders with more lenient criteria.”
John Charcol senior technical manager Ray Boulger believes smaller lenders will continue to take business off the big banks.
He says: “I expect this trend to continue. Several of the smaller building societies have started to get a bit more aggressive and the shifts in criteria are tending to come from these lenders. They are doing things that are a bit more innovative, particularly for older borrowers.”
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