Lloyds TBS and HBOS merger could affect property lending severely

Posted under General by Michael

The merger between HBOS and Lloyd TBS could seriously jeopardise mortgage lending in the UK.

HBOS has been playing a critical role as it accounted for 20% of total lending in the country as per the information furnished by Sir Bob Kerslake who heads the government appointed Homes and Communities Agency. He mentioned that though it was too early to foresee impact of the merger, there was little doubt that it would have serious effect on property lending.

Sir Bob went on to add that HBOS had much higher percentage of first-time buyers than anyone else in their customer base. He was unsure how this would play out in the days to come. He observed that a collapse would have made things still worse and hoped that Halifax’s policies would be continued to avoid even more serious effect than what had been experienced so far.

The UK property industry is holding banks responsible for reduction in mortgage lending which led to 12.5% crash in the house prices in course of 12 months. Lloyd and HBOS command 28% of the mortgage market in the UK.

According to John Stewart who is economic affairs director at the Home Builders Federation, lack of mortgage availability was the major cause for fall in housing prices and differed with the view that reluctant buyers, who were waiting to see the bottom of the market, were responsible for the crash. He considered lack of liquidity in the mortgage system as the basic problem for mortgage availability.