Its raining, its pouring, the big banks aren't lending...

A very interesting week this week , as we see the banks post their profits for the first half year (you will see this cunningly referred to as "H1" - about as cunning as a fox, from the village of cunning!).  This is a big announcement. It gives us all an indication of how the banks are performing, if they are on target and how it compared to last year. For me, one of the most annoying statements of the mortgage industry is "how did it compare to last year?" This is never a straight comparison. There are so many variables that contribute to the outcome of lending year on year that I find nothing but frustration in these comparisons! However, that said, I can understand why they are reported.

And so it begins. Santander down 21% on gross lending from last year. Market share fallen from 19.1% to 15.4%. Great! Thanks for those stats. But could we look at the bigger picture here please. Why is it down? Barclays down 10% year on year on their gross lending, market share down from 14% to 12%. Oh dear god what is happening?! Northern Rock, down 25% on last years levels of lending over the same period. Don't PANIC! There is a simple answer here. The market was taken over by HSBC. They really went for it and were top of the best buys for a considerable period of time and it had the effect they desired... a big effect!

HSBC have always been the bane of us brokers lives. Why? Because they don't like dealing with brokers! Every now and again a broker will strike up a relationship with them and may get a few cases from them or send some to them but, in large, there is no official relationship between HSBC and the intermediary. Often this means, if HSBC want to take the market by storm it is without the help of us brokers. So when they decided they wanted to bulldoze the market, their headline rates stole the show. They went into 2011 with a good pipeline of business that was the result of outstanding rates, good advertising campaigns and an aggression no other lender was showing. This has seen HSBC publish results that show they are 35% up on their H1 results in 2011 compared to that of 2010. 35% UP! Their market share up 2% from 9% to 11%. Well done HSBC. A fantastic effort. This also, is the truth behind why brokers struggled in terms of written business tail end of 2010 and early part of 2011. HSBC were simply too damn good.

However, lenders are now fully aware they are under target. These stats don't lie, although as I mentioned at the outset, there are many other variables to consider. But we are already seeing lenders lower their margins. We're seeing rates some of us brokers have never seen before and more importantly for us, we're seeing HSBC no longer at the top of the best buys.

It is this aggression from the lenders, and THEIR panic that is of benefit to the consumer. The price wars that have started and the need to sustain a healthy pipeline going into 2012 has quite frankly seen stupid rates come about! 5 year fixeds from as low as 3.39% is lower than anything I have ever seen. Even better than that is the 2 year tracker followed by a 3 year FIXED  at 3.64%! What a deal! Abbey have come along with some very tempting "1 week only" offerings also that have seen service levels creek they have been so inundated with applications.

I guess what I am trying to say in my secret diary is that whilst all these headlines of lending dropping with some of the big boys is a little depressing, the reality is, this is only going to be of benefit to you , the consumer. The pressure to lend will intensify with the lenders. Will Santander or Barclays be happy they have lost market share to HSBC?! Of course not. This will drive them to lower margins, to become more competitive and further more to ensure they are not in the same position next year and that H1 results of 2012 will be higher due to a better pipeline.

So don't get too depressed about the gross lending being low, ladies and gents. Don't spit out your Earl Grey in shock when you read of falling lending in H1, as my prediction will be that H2 will show increases...left, right and centre! Not just with HSBC. That said, I may still take my local HSBC branch manager out for that round of golf...you never know when they may be needed.

"Hi, is Louis there please?"

"Louis...buddy, long time no speak . So that round of golf we were talking about...?"