Fears for mortgage market amid rumours of Santander’s UK exit
Santander UK is a prominent mortgage lender and recently cut rates on more than 70 mortgage products
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Your support makes all the difference.Santander’s potential exit from the UK could have a major ripple effect on the mortgage market, experts have warned.
This us despite the bank signalling to consumers and staff that it will be staying put.
Executive chairman Ana Botin insisted “We love the UK” following reports in the Financial Times that Santander is reconsidering its presence in the country.
“It is a core market and will remain a core market for Santander,” she told a panel at the World Economic Forum in Davos, Switzerland.
But news of the potential review raised concerns about how consumers could be affected should a major player decide to leave Britain’s high streets.
Douglas Grant, group chief executive of financial services group Manx Financial Group, said it would “deal a significant blow to competition within the banking sector, particularly in the mortgage market”.
“For a Government striving to ensure financial stability and address the housing shortage, such a move could prove highly detrimental,” he said.
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Santander UK, the international banking group’s UK subsidiary, is a prominent mortgage lender and recently cut rates on more than 70 mortgage products.
Experts said the move created more competitive rates for homeowners and could prompt rival lenders to improve their own offers in response.
But analysts for Jefferies said it is “not a secret” that Santander’s returns in the UK have been “below expectations for almost two decades”, leaving the subsidiary on a weaker footing than in other locations in Europe.
A potential crisis facing the motor finance sector also looms over the UK bank, which was forced to delay the publication of its financial results last year while it weighed up what the cost hit could be.
Santander eventually said it was setting aside some £295 million to cover potential compensation costs should a court rule that many customers were mis-sold car loans.
Credit ratings agency S&P Global Ratings identified Santander UK as one of the banks most affected by uncertainty over the issue, along with Lloyds.
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On Tuesday, it was revealed that Chancellor of the Exchequer Rachel Reeves had sought to intervene in a court hearing over the car finance case, arguing that it could damage the industry and make it more difficult and expensive to take out loans.
An application submitted to the Supreme Court also said it could “generate a perception that regulation in the UK is uncertain”.
The Financial Times reported that one former Santander executive said it has “always been a possibility” that Ms Botin would decide to sell the UK ringfenced bank, partly as a result of frustrations over costs and regulation in the country.
A spokeswoman for Santander stressed that “the UK is a core market for Santander and this has not changed”.