Mortgage expert fears "super group" of lenders

19/12/2008

The merging of HBOS and Lloyds TSB into a single firm could be bad news for mortgage holders in the UK, an expert has suggested.

Simon Chalk, head of advisory firm Mortgage Portfolio, said that the deal would lead to a "super group" that would leave only a "handful" of lenders left in the UK market.

In turn, this could make cheap deals less common, with industry competition less strong than before.

The £12.2 billion merger is scheduled to be completed next January.

Speaking to FT Adviser, Mr Chalk said that the credit crunch and property market downturn was to blame for the wave of consolidation deals that have affected the mortgage sector recently.

"I believe this kind of merger does pave the way for a super group leaving only a handful of lenders with [Lloyds/HBOS] taking more than 28 per cent of the mortgage market," he commented.

"Consolidations are not just forecast simply to survive. There is a different force behind it and consolidation has been a feature in the financial services marketplace and was evident even in the good days of just 18 months ago."

Tags; Current UK Economy, Young Family Finances,

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