14:53 PM, 27th October 2010, About 13 years ago
Peter Curran, Head of Intermediary Distribution at Lloyds Banking Group recently announced, “From 25 September, buy to let property portfolios will be limited to a maximum of three properties, or £2m worth of lending (whichever is exceeded first), across Lloyds Banking Group. At the same time, buy to let products will no longer be available via intermediary channels through either the Cheltenham and Gloucester or LTSB Scotland brands. Pipeline applications will be honoured but any subsequent changes will be assessed under our new policy. The changes will be effective from close of business on 24 September.”
Since Lloyds acquired the former HBoS Group they have constantly trimmed lending criteria and their panel of acceptable intermediary partners.
This latest announcement will doubtless send shock waves through both landlord and intermediary communities. It will be interesting to see what happens to the market in the coming months. At the beginning of the credit crunch Paragon Mortgages and Capital Home Loans withdrew from lending very quickly. This created a tsunami of business volumes across all other lenders, the result of which was they couldn’t cope. To counteract this they reduced LTV’s (loan to values) and increased their margins to control the flow of business.
These lenders have often been accused as profiteering but the reality is that demand has far outweighed supply which is the perfect economics to increase pricing and profit margins. Will history repeat itself? Could the actions of Lloyds create the predicted double dip in the UK housing market?
There is no doubt that the knock on affects of so many lenders withdrawing from the market combined with the Lloyds HBoS merger left Lloyds with a Monopoly over the buy to let mortgage market. It is generally accepted that any company with more than a 25% share of any market is usually regulated as a Monopoly. Several intermediaries have reported that as much as 50% of their buy to let mortgage business has found its way to a Lloyds brand in the last 18 months or so.
Only time will tell how Lloyds recent announcements will affect the market but two things are very obvious to The Money Centre: