Figures from the Bank of England show that lending fell by £2.4bn in the fourth quarter of last year, despite the introduction of the Funding for Lending Scheme (FLS), which is supposed to unlock the log-jam in the market. The banks have been roundly criticised for not doing more lending, while the Government has also been slated for not forcing them do more.
The Bank of England did say that it expects credit conditions to improve throughout 2013. Certainly, there is plenty to entice borrowers, with mortgage rates the cheapest we have ever seen. Wealthy borrowers requiring large loans, who are not always catered for by high-street lenders, will also find that private bank mortgages remain extremely competitively priced.
Criteria: an issue for private bank mortgages?
One concern is that high-street lenders’ criteria remain extremely tight, with interest-only, mortgages for older borrowers and those with complex income requirements, extremely difficult to come by. While some high-street lenders have started considering offering large mortgages, they are not as flexible as the private banks.
With private bank mortgages, the private banks take the time to get to understand the client and what he or she is about. As long as the client has a certain wealth, or potential for this level of wealth, the private banks may be happy to consider their case, move quickly and offer pricing that even undercuts some of the best deals available from high-street lenders.
Large loans: why service is crucial
While many articles about mortgages focus heavily on rate, we find that what is often the most important factor to our clients is speed of delivery. Often, clients are in a contract race and need a million-pound plus mortgage quickly. In order to beat the competition, they may need to know within hours whether funding is possible. This sort of answer isn’t really obtainable via the high-street banks; instead, it really is the remit of the private banks.
The FLS has got off to a slowish start but rates are falling and there is some real optimism, which is good to see. Now we need to see lenders follow through and do more lending, as they have said they will. This is particularly true of those lenders who are taking advantage of the cheap borrowing rates available via the scheme.
Large mortgage specialists
If you need advice about large mortgages or private bank mortgages, get in touch. Anderson Harris deals with many private banks and specialist lenders, and can get you an answer quickly.