Demise of specialists will hit competition
Share
This forecast, if proved true, would be a body blow to competition in the UK mortgage market.
Peter Williams, executive director of IMLA, says that there is a growing need to cater to the adverse market particularly as borrowers who were considered prime are now struggling to access finance.
His comments come as data from the Council of Mortgage Lenders reveals specialist lenders' share of gross lending slumped from 7% in 2007 to 2% in 2008.
He says: "We expect to see the specialist share fall further in 2009. Most of these firms have limited capacity to undertake new business given the closure of the securitisation market and their exclusion from government support.
"The industry does not expect this market to reopen till 2010 at the earliest so it is likely the specialist lender share will remain subdued." Williams says that specialists, as well as building societies, are vital to boosting competition in the market.
He adds: "There is a growing recognition of this fact but we are still some way from securing a restart to a significant specialist market.
"The US and Australian governments have supported the non-bank sector. We must ask why this is and why the UK government is overseeing the creation of a deeply uncompetitive mortgage market."
Specialist lenders did not feature highly on the CML's table charting the largest mortgage lenders in 2008.
Based on gross mortgage lending, GMAC-RFC fell from ninth place in 2007 to 25th, while Paragon Mortgages slipped from 15th place to 22nd.
Lloyds Banking Group was ranked as the biggest mortgage lender.
If you enjoyed this article, sign up here to receive daily email updates from Mortgage Strategy and Follow @mortgagestrat
