Today’s results announcement from Lloyds Banking Group were a mixed bag, with underlying profits down 17% yoy and including a £668million impairment charge as the bank braces itself for heavier loan losses amid soaring mortgage rates in the current market.
Mortgage brokers on Newspage have been sharing their reaction to today’s results statement as follows:
Graham Cox, founder of the Bristol-based broker, SelfEmployedMortgageHub.com: “The higher impairment charges and reduced profits Lloyds is seeing are likely to be replicated across the banking sector. After having pandemic life-support switched off, many businesses are now struggling with much higher input costs and reduced demand. And with property prices inflated by Rishi Sunak’s stamp duty holiday and ultra-cheap credit, the chickens are now coming home to roost in the mortgage market. It’s quite conceivable house prices could fall 20-30% over the next couple of years, meaning impairment charges could start to get a whole lot bigger.”
Emma Jones, Managing Director of Frodsham-based broker, When The Bank Says No: “The fact that a lender the size of Lloyds is readying itself for a rise in mortgage losses suggests we are in for a turbulent 12-18 months ahead.”
Lewis Shaw, owner of Teesside-based Riverside Mortgages: “With the recent political and economic turmoil, it’s unsurprising that Lloyds Banking Group is preparing for problems caused by rocketing mortgage rates, at the same time as energy bills are increasing. I hope this isn’t a sign of things to come but when a lender of this magnitude decides to plant their flag in the ground we should all sit up and take note. They know the game and I trust the way they play. However, let’s put this in context, because of Halifax, Lloyds Banking Group are the biggest mortgage lender in the UK therefore they do need to protect themselves, more so than others.”
Malcolm Davidson, Director of Hull-based broker, UK Moneyman: “There’s little doubt that cases of mortgage arrears will increase to some extent due to the recent spike in interest rates, which was caused by our previous Prime Minister’s unfunded, un-voted for fiscal experiment, which has now been thrown out like a disused lettuce. Mortgage rates have started to drop this week and we can only hope that the upcoming rise in the Bank of England base rate was already factored into the mortgage increases we saw and the worst of this is now behind us.”