Few best-buys from state-owned banks

Lloyds Banking Group (LBG) and Northern Rock account for fewer than one in six best-buy mortgage products.

Mortgage software provider Evaluate Technologies calculates that the ‘good’ bank part of Northern Rock which is still writing new mortgage business, provides eight of the 50 best-buy deals currently on offer, but the partly state-owned LBG has no best-buy products at all.

LBG is 41% owned by the state, and Northern Rock 100%. There has been speculation that the Government would bring pressure on them to offer competitive deals to first-time buyers and kickstart the housing market.

However, both lenders are under pressure to generate maximum profits in order to pay back the taxpayer. The fact that LBG in particular has no best buy mortgages suggests that its appetite for more, and more risky lending remains absent.

Evaluate dubs the part-nationalised and fully nationalized lenders ‘The Bank of Gordon’, consisting of Halifax, Lloyds TSB, Cheltenham & Gloucester, NatWest, Northern Rock, Royal Bank of Scotland, The One Account and Scottish Widows.

Jim Barrowman, national accounts director at Evaluate Technologies said:

“The nationalised banks don’t appear to be doing much to compete for mortgage customers’ business.

“The Bank of Gordon has been accused of increasing margins on mortgage customers and their failure to appear regularly amongst the best-buys despite the lenders size, would seem to suggest this is the case.”

Evaluate reports that the lender with the most consistently competitive mortgages is Santander (formerly Abbey) offering nine products either directly or through Abbey for Intermediaries, while HSBC offers eight products either direct or through First Direct.