AA Mortgages and Magellan Homeloans have become the latest lenders to withdraw from the mortgage market, blaming big banks for undercutting their cheapest rates.
Aaron Strutt of Trinity Financial told The Telegraph: “There has been a worrying trickle of lenders pulling out of the mortgage market recently and they all say there is too much competition and how difficult it is to make large enough profits.
“Most of the lenders pulling out have been in the specialist market but the AA is the biggest mainstream provider to withdraw. I would not bet against more of them going over the foreseeable future because of the current market conditions.”
Mr Strutt said that high street banks were now more receptive to customers with less-than-perfect credit histories, such as having missed a couple of card repayments, and this had squeezed lenders like Magellan out of the market. He said the AA had been undercut on price. “It was up against some really tough competition including HSBC and Santander with their big advertising budgets and super-cheap rates," he added.
“Most of the lenders are trying to provide more mortgages this year and the biggest banks and building societies are actively looking to undercut their rivals.”