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News

Published: 23 August 2011 | Author: Bernard Clarke

There was little change in the names at the top of the list of largest lenders last year, according to the new CML top 30 lenders’ data published today. However, mid-sized lenders increased both their lending levels and their market share, and there were five first-time entrants to the “top 30” by gross lending in 2010.

The CML publishes two lists of lenders by relative size. The first is based on the level of lending that each lender undertook during the year. The second is based on the overall value of mortgages held with each lender, irrespective of when they were taken out.

Particularly since the financial crisis, there has been a significant difference between the two lists. This is because some lenders which were previously active have stopped doing any new lending or are undertaking a lower volume of lending, while other lenders which were relatively active in 2010 (albeit in a very subdued market) do not necessarily have such a significant back book of existing business.

While the CML makes strenuous efforts to check accuracy, it is crucial to note the various exclusions and limitations to comparisons that apply to both lists (which are fully set out in the footnotes to the tables). If citing any of the information published in the tables, please pay particular attention to the notes.

The top 30 by gross lending volume

It will surprise no-one that the same six lenders as in 2009 dominated gross lending in 2010, together accounting for an estimated 81.5% of the total volume of lending undertaken last year. This was slightly down from the 83% market share that these lenders collectively represented in 2009.

In terms of value, the largest six lenders collectively accounted for just under £111 billion of lending, down from £119 billion in 2009.

Increased lending by mid-sized lenders

Perhaps the most notable feature of this year’s gross lending table is the increase both in lending volume and in market share of the mid-sized lenders. Those lenders ranked from 7-15 in the table together undertook around £19.6 billion of lending last year, nearly double their combined lending of £10 billion in 2009.

Together, the mid-sized lenders’ market share rose from a fraction over 7% in 2009 to 14% in 2010. While this is in the context of a market that was extremely subdued, it is nevertheless a notable change. It certainly points to the capacity and appetite of the mid-sized lenders to continue to bring diversity to a market that has become highly concentrated among a small number of large providers in the wake of the financial crisis.

New entrants among the smaller lenders

Among the smaller top 30 lenders (each with market share below 0.5% of the total), a number of new entrants appear on the list. 2010 saw the following lenders in the top 30 for the first time: Saffron Building Society, Cambridge Building Society, UBS, Aldermore Mortgages and Market Harborough Building Society.

Together, the lenders ranked from 16-30 undertook 2.5% of the share of total gross lending in 2010, leaving around 2% of the market spread among the remaining active lenders outside the largest 30.

Largest mortgage lenders by gross lending

Source:  Thedata Ltd     
Notes:
1. Most figures are shown on a calendar year basis. Where we are not able to obtain calendar year figures we have used published results for the organisation's financial year which ended in the same year.      
2. All figures relate to calendar year except:     
Clydesdale & Yorkshire Banks & Paragon:  Sep 10   
3. Where possible, gross lending figures are shown net of portfolios purchased.     
4. Figures are rounded to the nearest £100 million and ranked on the same basis.     
5. Wherever possible, figures are shown on a financial services group basis.     
Figures for previous years have been adjusted to account for any mergers and acquisitions occurring in the latest year.     
6. Figures for lenders outside CML membership are taken from published accounts,     
 and may not be on a basis that is fully comparable with those from CML members.     
7. Figures for Kensington are not available.     
8. Yorkshire BS 2010 figures include figures for Chelsea BS, which it acquired in that financial year. However Chelsea figures are not available for 2009.
9. In previous years' publications, Nationwide BS figures were reported on a different basis than others shown in the table. Figures shown here are now fully consistent, both for 2009 and 2010. However, values and rankings for Nationwide BS will differ from those shown in last year's table. 

Lenders with the largest value of outstanding mortgages

Particularly since the financial crisis, there has been a significant difference between the size of lenders by gross lending, compared against the size of lenders measured by their outstanding lending. Some lenders which previously undertook large amounts of lending have become inactive or less active for new business, while other lenders which have recently taken a larger share of business are not those with historically large mortgage books.

The same “big six”, however, appear at the top of the balances outstanding table as the gross lending table. Together, these lenders account for around £899 billion of outstanding mortgages – nearly 73% of the total mortgage stock as at the end of 2010. Although this was an increase on their £884 billion combined balances at the end of 2009, and their 71.5% share at that time, their combined back book still represents a lower share of market than their 81.5% share of gross lending for 2010, reflecting the ongoing concentration effects on the supply of new lending that were one of the effects of the financial crisis.

Beyond the top 6, the list of lenders by balances outstanding aligns far less directly with the list by gross lending in 2010. While a number of lenders appear on both lists, their relative position is often very different, for the reasons highlighted earlier. [It is important to note the exclusion from the table of some portfolios for which data are not available, but which have previously featured - explained in the footnotes].

Largest mortgage lenders by balances outstanding

Source:  Thedata Ltd     
Notes: 
1. Most figures are shown on a calendar year basis. Where we are not able to obtain calendar year figures we have used published results for the organisation's financial year which ended in the same year.
2. All figures relate to calendar year except:     
Clydesdale & Yorkshire Banks & Paragon: Sep 10
Kensington: Mar 10
3. Where possible, gross lending figures are shown net of portfolios purchased.
4. Figures are rounded to the nearest £100 million and ranked on the same basis.
5. Wherever possible, figures are shown on a financial services group basis. Figures for previous years have been adjusted to account for any mergers and acquisitions occurring in the latest year.
6. Figures for lenders outside CML membership are taken from published accounts,  and may not be on a basis that is fully comparable with those from CML members.     
7. Figures for Paratus (formerly GMAC-RFC) and Acenden (administrators for Lehman group lenders' portfolio) are not available. These organisations both featured in the largest lenders by balances outstanding for the most recent years of data available: Paratus £4.1bn (2009); Acenden £7.8 bn (2008).
8. Yorkshire BS 2010 figures include figures for Chelsea BS, which it acquired in that financial year. However Chelsea figures are not available for 2009.
9. Figures for Redstone Mortgages are not available for 2009.     
10. Figures for Northern Rock Asset Management in 2009 include a portfolio of approximately £10 bn transferred to Northern Rock plc on January 1 2010. This portfolio is also included in the 2009 Northern Rock plc figure for 2009.
11. In previous years' publications, Nationwide BS figures were reported on a different basis than others shown in the table. Figures shown here are now fully consistent, both for 2009 and 2010. However, values and rankings for Nationwide BS will differ from those shown in last year's table.  

What will next year’s tables look like?

While there is still plenty of 2011 left, and situations can change, it seems likely that next year’s tables will reflect the situation that we have been experiencing so far this year. Concentration among the largest lenders is still a significant feature, but the mid-sized lenders seem likely to continue the 2010 trend of increasing their share of new lending, even though the overall market remains muted. This trend is a welcome development in a market that values consumer choice and market diversity.