Lehman Brothers is considering suspending lending at its two UK mortgage lending divisions Southern Pacific Mortgage Limited and Preferred Mortgages.
Rumours were rife this morning among packagers that Lehmans was looking to suspend lending and a source close to the firm confirmed that this was one of the options it was considering.
No further information was available as to whether it would honour pipeline cases or when the suspension would take place.
But one packager told Mortgage Strategy that if Lehmans did consider suspending lending it would put the remaining lenders doing volume sub-prime – such as BM Solutions, Future Mortgages and GE Money Home Lending – under further pressure.
He says: “There are a mass of sub-prime and near prime applications out there looking for a place to port. Any lender that falls by the way side puts the remaining firms still doing the business under increasing pressure.”