13 Feb Santander’s Loan to Values…
A quick note on this a few days after the news that Santander are now insisting that all mortgages with loan to values over 50% are set up on a capital repayment basis (i.e. no interest only).
This news signals either a dramatic worsening of lending conditions in the UK (does Santander really need to rebuild its balance sheet that much?) or that Santander has thrown their toys out of the pram after being lent on.
Why has this happened?
Is Santander in a bit of trouble? This is not just a bit of lending policy adjustment – it’s a serious statement of future lending ability.
Or has someone been leaning on the bank to makes these changes? Rumours circulate that the city regulator is worried about lending money to people who cannot afford to repay it.
Interest Only mortgages are political hot news at the moment. The Vickers report into UK mortgages suggests they should be banned outright.
It wouldn’t take a genius to guess that the regulator might identify Santander as the bank that will lend the highest loan amount on an interest only basis.
It does seem a bit of an overreaction to reduce the band from 75% loan to value to 50% in one go – that is quite some jump.
It remains to be seen whose decision this is – but it’s not good for the new business figures at Santander, a bank which seems very committed to the UK mortgage market.
There is one last possibility – that the bank has got it’s ideas a bit wrong. It wouldn’t be the first time a bank makes a significant policy decision, just to quietly abandon it a few months later.
PLUS: Of course the idea that the government, the banks and the city regulator would gang up to tell us what we can and cannot afford and also to insist we repay our debts could be regarded as a touch rich, after all…
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