Home Funding chief executive Tony Ward says new lenders will not be able to enter the mortgage market unless there have considerable scale.
Many high-profile new lenders have announced their intentions to enter the UK mortgage market over the past two years, including Tesco Bank, Virgin Money, NBNK, Portillion and Home and Savings Bank and have experienced delays in entering the sector.
Two of the most well known entrants have been Metro Bank and JC Flowers through its acquisition of Kent Reliance Building Society.
Speaking at the Imla executive briefing in conjunction with Money Marketing last week , Ward says high capital requirements and the difficulty in obtaining funding means smaller lenders will not be able to enter the first-charge mortgage market.
He said: “In terms of new lenders coming into the market, I have done the numbers again and again and I am afraid it does not work. I do not see a new lender coming into the first-charge lending market. I think if you are an established player where you have at least the advantage of economies of scale and capital it is possible but otherwise it just does not work on so many fronts – funding, capital and demand for mortgages is not there either.”