Fewer lenders dominate home loans

Six mortgage lenders increased their hold over the market for new UK home loans in 2008, according to Council of Mortgage Lenders (CML) data.
The top six, led by the Lloyds banking group, accounted for 78% of all new loans, compared to 72% the year before.
The CML said the credit crunch, which started in 2007, had dried up the supply of mortgage finance.
Overall new lending fell by 28% last year, with some specialist lenders being driven out altogether.
"The lending community itself has undergone... dramatic changes," the CML said.
"With so many lenders either merging or ceasing lending, this year's largest lenders' table has changed more than in other years," it added.
Driven out
A key factor was Northern Rock dropping out of the top-ten mortgage lenders as a result of its insolvency in 2007, when it accounted for 8% of all new lending.
In 2008 it lent just 1.1% of new mortgage funds.
But the CML said another factor was that specialist lenders - those which did not depend on savers' money to finance their lending - had fallen from a 7% share of new lending to just 2%, and of a much smaller market.

"In effect, many specialist lenders ceased new lending in 2008," the CML said.
Ray Boulger of mortgage brokers John Charcol, said borrowers were now receiving the worst of all possible worlds.
"If you have fewer lenders you have less competition," he said.
"Those lenders still in the market have only limited amounts to lend, so they aren't competing hard with each other if borrowers have less than a 25% deposit," he added.
After Lloyds, the biggest lenders in 2008 were Santander, the Nationwide, Barclays, RBS and HSBC.
Mergers
Banks and building societies were also badly affected by the drying up of funds from the wholesale banking markets.
House prices fell, undermining the value of their past loans, and more borrowers defaulted on their mortgages because of the recession.
One effect was a flurry of mergers and takeovers, with some of the more financially troubled lenders having to be rescued by larger operators.
Lloyds TSB took over HBOS, which meant that the first and third largest lenders were combined.
And the Spanish bank Santander, which had already taken over the Abbey, also took over the Alliance & Leicester.
Among building societies, the Nationwide took over both the Cheshire and Derbyshire building societies, and there were mergers between the Scarborough and Skipton, the Catholic and the Chelsea, and the Barnsley and Yorkshire building societies.
"We may not have seen the end of the current wave of consolidation," the CML warned.
"So, next year's table is likely to look different again, with more new names and an even larger market share in the hands of the largest firms," it added.