Leader: At last, some good news
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The news this week that new entrant Aldermore will soon be ready to start lending is fantastic.
There has been a lot of talk about new lenders getting into the market in the past couple of years but far less evidence of anyone doing anything about it. Not that this has been down to procrastination - lack of funding and the Financial Services Authority have both played their part.
At the end of last year there were rumours that around 30 new entrants were waiting to gain permission. But with the regulator admitting it takes between six and 12 months to rubber stamp a new entrant, who knows how long it will be before any of these get the opportunity to put their money where their mouths are?
Metro Bank will be the first bank to open on the High Street in 150 years after it got its full licence on Friday, having first applied to the FSA as far back as early 2008.
A new entrant now has to factor every eventuality into their application - oil crisis, house price crash, alien invasion - only those with cast iron business plans get approved. It’s this lack of competition, along with the funding drought, that has led some commentators to predict that gross mortgage lending in 2010 will not be much improved on last year, at just over £150bn.
Anyone looking to launch has to rely on something that five years ago was seen as old hat - retail deposits.
TAldermore had a slightly easier job in that Ruffler Bank and Base Capital, rebranded as Aldermore, already had permission and retail deposits.
he news that it wants to get into a market that has tested the business models of established lenders and provide a meaningful amount of funds to borrowers should be welcomed.
