(1888PressRelease)
April 05, 2008 - Two more banks – the Co-operative Bank and the UK divisions of Lehman Brothers – have announced the withdrawal of some of their mortgage deals, a move which follows fast on the heels of First Direct suspending its entire range of mortgage products to new customers.
As of April 3rd, the Co-operative Bank is withdrawing all its two-year mortgages. Like First Direct, the highly competitive deals it had been offering resulted in huge customer demand, so consequently it has had to withdraw its ‘best buy’ deals as a temporary measure and concentrate on the other mortgage products it offers.
The US investment bank Lehman Brothers is shutting its two UK home loan divisions, Southern Pacific Mortgage Limited and Preferred Mortgages, signaling the bank’s effective withdrawal from the UK mortgage market. The divisions had been set up specifically to target the UK sub-prime market, part of Lehman Brother’s heavily-resourced expansion into what seemed a promising sector. (These divisions generated some £4 billion of home loans in 2006.) The collapse of this market in the wake of the credit crunch and liquidity crisis meant the bank could no longer keep its UK offshoots open for business – besides the two closures today, last year it closed its London Mortgage Company and Southern Pacific Personal Loans, with all these closures resulting in heavy job losses.
Halifax, the UK’s biggest mortgage lender, is on ‘withdrawal watch’ amid speculation that it might follow suit and start pulling its deals and offering more expensive products instead.
The number of mortgage products on offer has fallen dramatically, with a 20% fall in the last week alone, according to financial information group Moneyfacts. Some 2,930 deals have been removed from the market since the beginning of March. As banks and building societies find it increasingly difficult to raise the funds needed to offer mortgages to their customers, this trend can only worsen.
“With lenders calling time on competitive deals, and mortgage options fewer by the week, borrowers are finding their first step onto the property ladder more elusive than ever,” said Lawrence Smith of Decision Home buyers. “In turn, sellers will need to take into account the reduced afford ability among buyers, and adjust their asking price accordingly – or be prepared to wait indefinitely for selling conditions to improve.”
For press inquiries, please contact Phil Rendall on 020 7099 9026
Email: phil ( @ ) dhbuyers dot co dot uk
Web: www.decisionhomebuyers.co.uk
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Decision Home buyers carries out daily surveys of the national media to provide up-to-date news and commentary on the UK property market.
