Mid range lenders begin to challenge the UK’s ‘big six’

31st Jul 12
Chris Lloyd PARTNER

Chris Lloyd

Mid range lenders begin to challenge the UK’s ‘big six’

Chris Lloyd

If you’re looking for your next large mortgage, there is an increasing chance that it won’t be with one of the UK’s ‘big six’ lenders. New figures show that mid-range lenders increased their share of the mortgage market in the last year with some of the leading building societies significantly increasing their loan books in 2011.

The days of approaching a major bank for high net worth finance appear to be ending, according to these new figures. Keep reading to find out why your next large mortgage may not come from a High Street bank.

Mid range lenders increase lending by over £5 billion

The Council of Mortgage Lenders (CML) figures show that Lloyds Banking Group remains the biggest mortgage lender in the UK, followed by Santander, Nationwide, Barclays, the Royal Bank of Scotland and HSBC.

However, the data shows an expansion of lending activity by lenders in the tier just below the largest six firms. My Introducer reports that the next five largest lenders on the list saw their market share increase from 9.9 per cent in 2010 to 13.2 per cent last year. These lenders advanced £18.7 billion in 2011, up from £13.3 billion in 2010.

The figures also show that the largest mutual lenders are also lending more. The Nationwide, Yorkshire, Coventry, Skipton and Leeds building societies all increased their market share last year, as did Northern Rock and Clydesdale.

Hugh Wade-Jones, director of London mortgage broker Enness Private Clients, said: “Many of the mid- range lenders have used the plight of the larger banks to increase their share of the mortgage market over the last couple of years. Competitive deals and careful lending practices have helped some of the smaller lenders to expand their loan books, and we’re increasingly looking outside the ‘big six’ for our high net worth mortgage clients.”

The CML figures show that, perhaps surprisingly, ING Direct has been the fastest-growing lender in relative terms over the last two years. ING Direct advanced £3 billion of mortgages in 2010 compared to just £0.1 billion in 2009 and are now the UK’s 10th largest lender.

The Co-Operative Group are now the country’s 12th largest lender and expect to break into the top ten following their recent acquisition of over 600 Lloyds branches. Aldermore Mortgages, a lesser known lender, also made the 2011 top twenty list.

Mr Wade-Jones continued: “The days of the large players dominating the large mortgage market appear to be coming to an end. We find that we are increasingly turning to other lenders such as private banks and some of the mid range banks and mutuals to provide the service, underwriting flexibility and interest rates that our night net worth finance clients demand.”