Too few banks means too few loans

by Ed Bowsher on 26 July 2009  |  0 comments
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The reduced level of competition in the banking market is going to be a big financial issue for the next few years.

There's an excellent article in today's 'Observer' on the banking market.

According to the article, there used to be up to 100 brands battling for custom in the UK mortgage market. Now the only remaining serious players are Royal Bank of Scotland, Lloyds, HSBC, Barclays, Santander and Nationwide.

Given that background it's not surprising that it's harder for many people to get a decent mortgage. When I speak to my colleagues in lovemoney.com's mortgage team, they tell me that the banks are only offering the best deals to people with excellent credit ratings. Yes, there are 90% mortgages available for first-time-buyers. The trouble is that many first-time-buyers can't get the mortgages, even though they have sufficient savings to pay a 10% deposit.

George Osborne and the Conservatives have rightly raised the issue of the future structure of our banking industry. At some point, Lloyds Banking Group will have to be broken up. Perhaps Royal Bank of Scotland too.