Big mortgage lenders suffer most from credit crunch

Less than a third of the top mortgages on the market today come from the country’s 10 largest lenders, according to price comparison Web site Moneyfacts.co.uk.

These lenders, which accounted for three-quarters of gross mortgage lending in 2006, offer just 68 of the leading 250 mortgage products -- 27 percent.

The fallout from the credit crunch and a slowing housing market have forced lenders to consider their position in the market and reassess their attitude to risk-based lending.

That has seen them scrap cheap fixed-rate deals and 100 percent-plus loans, and tighten their lending criteria.

The tough environment has hit thousands of mortgage borrowers, many of whom are facing ‘payment shock’ when current mortgage deals expire.

Denise Harvey, a mortgage analyst at Moneyfacts, said: ‘Post credit crunch, some of the larger lenders have appeared to have suffered the most; previously they had been able to fund a large section of their lending through the money markets, but today that just isn’t possible.’

However, larger banks with smaller subsidiary companies-such as the Royal Bank of Scotland (RBS) group, which owns the First Active, NatWest and Direct Line brands, as well as Ireland’s Ulster Bank-appear to be better weathering the storm.

RBS offers 26 of the 68 ‘top’ products from the ten largest lenders, but these come from nine different brands.

HSBC takes second place, with 13 products-five of which are offered by its increasingly-competitive First Direct subsidiary.

In contrast, troubled mortgage bank Northern Rock, Alliance and Leicester and GMAC all failed to make the top 250.

‘In a time when many (people) are struggling to find a suitable mortgage, these results show that it is definitely worth looking around for the best deal,’ added Harvey.

‘Going for a smaller, less well-known lender may well save you money.’