Private banks enter high-end mortgage market

Competition is set to increase at the top end of the mortgage market after several private banks gained permission this month to offer residential loans to wealthy borrowers.

JPMorgan and Standard Chartered have recently gained approval from the Financial Services Authority (FSA) to write residential mortgages. Banks need to apply for a licence from the regulator before they are allowed to lend on residential property.

“We have definitely
seen an increase in the number of private banks applying for their
residential licences,” said Simon Gammon of Knight Frank Finance.

Nigel Bedford of said Standard Chartered would require borrowers
to have at least £1m in investable assets and
would want a significant proportion of those assets placed with the private bank straight away. JPMorgan will lend mortgages at the higher end of the market, from £6m to £20m and primarily for existing clients.

Investec Specialist Private Bank is another bank that is keen to expand its lending business this year. It offers loans to individuals with earnings of more than £300,000 a year who are looking to borrow a minimum of £1m.

A number of high street mortgage lenders have also increased their appetite to lend on large loans. Both Cheltenham & Gloucester and Halifax are keen to advance more £1m-plus mortgages, brokers said.

But Bedford says private bank deals are typically more competitively priced than high street loans for purchases of more than £1m. Private banks will
offer the right type of
client rates as low as 1.25 per cent over Libor, the
rate at which banks lend to each other.

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