There is a danger of HBOS becoming the Chelsea FC of the mortgage market because of its financial clout, claims Pink Home Loans managing director Tony Jones.Jones fears the big lenders are pulling away from smaller players, which he considers could harm the market, and he believes the upcoming Basel II capital-adequacy requirements will make the difference even more pronounced. He compares HBOS with Russian billionaire Roman Abramovich’s Chelsea, saying HBOS is using its financial muscle to pull ahead of its rivals in the mortgage market. Data from the Council of Mortgage Lenders shows the big six players – HBOS, Abbey, Lloyds TSB, Nationwide, Northern Rock and Royal Bank of Scotland – controlled 63 per cent of the market in 2005, with HBOS on 21 per cent, way ahead of Abbey with10 per cent. Jones says: “HBOS is pulling away a bit like Chelsea. HBOS will welcome a challenge and that would be helpful to keep it on its toes but the smaller guys need to be more innovative. “With Basel, if firms can demonstrate that they are calculating risk better, and you need a certain size for that, then their cost of funds is lower and smaller firms may not all be able to match that.” Northern Rock, whose gross mortgage lending grew from 20.1bn in 2004 to 23.6bn last year, has been tipped by Hamptons International Mortgages as the most likely of the chasing pack to push HBOS. Hamptons technical director Jonathan Cornell says: “Tony is spot-on. In football terms, it is like putting Chelsea in the Conference and letting them scrap it out. Abbey has made strong strides but Northern Rock is most likely to challenge HBOS.”
It was interesting to attend one of G&N’s investment trust seminars and hear all four groups presenting kick off their sessions with an explanation of how they went about managing the funds at their disposal.
The UK could follow the US, with rising rates slowing the market right down
Are you recommending alternatively secured pensions to clients who do not want to buy an annuity at 75?
No – 63%
Yes – 37%
Portman Building Society
Two-Year Discount Mortgage
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