Final nail in the coffin for the specialist sector

Back in the sub-prime boom, Lehman Brothers and Merill Lynch were a packagers best friend and acted as the backbone to the specialist market and lenders funding.

With the news that Lehman is bankrupt and Merill has been bought by Bank of America, does this signal the final nail in the coffin for the specialist sector?

The impact of the collapse of the two banks will have no immediate affect on the packager market but will leave a big dent in the confidence of the mortgage sector.

Both Lehman and Merrill have already pulled out of the UK packager market so it won’t matter in terms of product availability or business volumes.

However, if a sub-prime market was ever to return to the UK it is likely that it will be through one of the larger American investment banks, which is less likely to happen now.

In a market that relies so heavily on the US, the impact on the UK will not go unnoticed and investors will slowly start to shy away from pumping more money into the UK economy.

It took less than 24 hours for consumer confidence to dip in Northern Rock when it emerged that it needed to be bailed out.

The news about Lehman will not give any hope to anyone and signifies that the troubles in the financial market are long from over, speculation that we had already hit the worst of our problems have been blown out of the water.