Profit margins at the UK’s 15 largest mortgage lenders fell in the first half of the year, highlighting the effects of a vicious price war in the most important market for Britain’s retail banks. The root cause of much of the pressure in the mortgage market is legislation that came into force at the start of the year that aims to reduce risk. The requirement that large banks separate — ringfence — their domestic retail banking operations from international and investment banking has left banks such as Barclays, and particularly HSBC, with huge excesses of customer deposits that can only be put to use in the UK retail market, including the mortgage business.
Profit margins at the UK’s 15 largest mortgage lenders fell in the first half of the year, highlighting the effects of a vicious price war in the most important market for Britain’s retail banks. The root cause of much of the pressure in the mortgage market is legislation that came into force at the start of the year that aims to reduce risk. The requirement that large banks separate — ringfence — their domestic retail banking operations from international and investment banking has left banks such as Barclays, and particularly HSBC, with huge excesses of customer deposits that can only be put to use in the UK retail market, including the mortgage business.
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