including the so-called Big Four banks, are struggling to cope with the highly competitive market. According to data issued by the Bank of England, average mortgage spreads, which measures relative profitability of mortgage loans, reached its highest level in seven years in late 2020, but has been gradually declining since then. “We see the mortgage business as still OK, but a lot less attractive than it was,” Abrahams noted.
His counterpart at Lloyds Banking Group, William Chalmers, also noted that while the bank grew its mortgage book by 5 per cent in the first half of this year and completed more mortgage loans in June than in any month since the financial crisis, however, there is no doubt that competition in the market is getting more aggressive. Therefore, Lloyds Banking, UK’s largest retail lender, plans to be “disciplined” in its lending over the rest of the year, he added.
While the situation has raised concerns among lenders, however, the competition is likely to be good news for borrowers. As several banks continue to offer new below-average mortgage deals, BoE data showed the two-year fixed rate with 75 per cent loan-to-value came close to an all-time low in June.
