Borrowers Opt for Big Banks
Monday, 30 March 2009
The big four banks are dominating the mortgage market as borrowers seek the security of an established name. Over the past year, leading broker Mortgage Choice saw the big four banks increase their share of its business from 60% to 83%. The business share of foreign banks fell from 16% to 9%, while building societies, credit unions and regional banks also suffered major drops.
Previously many smaller lenders were able to offer better deals than the big banks by relying on cheap overseas funds. The worldwide credit crunch quickly erased this advantage, putting the big banks back in the box seat.
Lenders who targeted non-conforming markets were doubly affected by the credit crisis with no one willing to secure risky loans. Because of this there are now fewer products on the market, with low-doc loans and those with high loan to valuation ratios not widely available. Borrowers have also been more cautious, with a strong preference for “traditional lenders”.
