There is usually a clear issue or a couple of related topics that lend themselves to this column. But this week I am at loss. In what is probably the most significant week in the mortgage industry in the last decade, where to start? Do I start with the infection from America, where the crises happen so fast they run into each other, prompting the US Treasury to start muttering about plans to change how mortgages are structured?
Or what about the FSA’s desperate decision to temporarily ban the short selling of stocks, after it watched, embarrassingly powerless to act, as HBoS’s share price was eroded away, before it fell into the arms of Lloyds TSB?
Or what of the Government’s waiving aside of competition law, creating a lender with almost 30% of the market and seven brands, in its haste to remove any obstacles to the deal and avoid the potential for another Northern Rock?
The problem is that everything is interlinked and hypersensitive to change. Decisions made in one sector have immediate and often unintended consequences across others. Market wobbles get amplified, and rumours take on solid form which no-one could have foreseen.
But what will the Lloyds TSB/HBoS deal mean for mortgage intermediaries? Will the creation of a ‘superlender’ prove to be a positive or disastrous decision for the mortgage market?
Although this deal has trampled all over competition law, it is unlikely that it will be allowed to dominate the UK mortgage market, even if it wanted to. It is generally accepted that L loyds has weathered the credit crunch better than most, so it is likely it will want to reduce its balance sheet to reduce the wholesale funding gap. If it does, it could result in less available credit, which will have a further knock-on effect on UK plc and on house prices. n
