Smaller lenders boost mortgage market share

Smaller lenders have gained from the recent mortgage price war by winning larger shares of the market as the battle for customers’ business has intensified.

Figures released by the Council of Mortgage Lenders (CML) show that lenders such as Clydesdale Bank, Skipton Building Society, Paragon Mortgages and OneSavings Bank increased their estimated market shares in 2014 as ultra low mortgage rates and a raft of home buying schemes helped to boost competition generally.

Meanwhile, the the country’s six biggest lenders collectively accounted for 72 per cent of activity, a figure little changed from 2013.

Releasing a list of the top 20 biggest mortgage lenders in 2014, the CML said that levels of competition between lenders are now looking more “normal” than during the credit crunch.

In the run-up to the credit crunch, competition for business was strong. This meant that the six largest lenders only accounted for 60 per cent of total mortgage lending in 2007, the CML said. But by 2009, the six largest lenders had grown their combined market share to account for 86 per cent of new business.

However, last year, the six largest mortgage lenders - Lloyds Banking Group, Santander, Nationwide Building Society, Barclays, Royal Bank of Scotland and HSBC - only accounted for 72 per cent of activity.

While the six largest lenders saw a “healthy” 17 per cent growth in activity last year, the lenders ranked from number seven to 20 saw a much stronger growth in activity, by 46 per cent overall, the CML said.

It said that, for example, Bank of Ireland doubled its lending in 2015.

Bank of Ireland’s estimated market share increased from 0.5 per cent in 2013 to 0.9 per cent in 2014.

Skipton Building Society increased its estimated market share from 1.3 per cent to 1.4 per cent, Paragon increased its estimated share from 0.2 per cent to 0.3 per cent and OneSavings Bank increased its estimated market share from 0.5 per cent to 0.7 per cent.

The figures also show that while Lloyds Banking Group held its position as the country’s biggest mortgage lender last year, Santander moved into second position, moving Nationwide Building Society into third place.

Lloyds’ estimated market share decreased slightly in 2014, to 19.8 per cent, from 20 per cent in 2013.