Will French: My business week

Mortgage broker and former City trader Will French asks if it's best to stick with the big names for a home loan
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The Independent Online

It seems to me that some of the high-street lenders are revealing their level of exposure to the credit crunch by what they do with interest rates. Last month the Halifax, Nationwide and Abbey promptly lowered their standard variable rate by 0.25 per cent (as normally expected after a Bank of England base rate cut). However, some of the smaller lenders have still failed to act.

Is this due to experience? Is it due to the big boys' lower-risk lending criteria, which means they don't need to charge a premium to cover cases where loans won't be repaid? Or is it due just to their having deeper pockets? Only they know.

What I know, though, is that if I were to remortgage or purchase a property, I would rather borrow from a company showing confidence, that has seen this kind of situation before, and that has a track record of dealing with financial issues while the market is in turmoil.

Whether or not rates fall soon, as predicted, I can't see lenders being as frivolous with their lending as they have in recent years. US defaults on mortgages the sub-prime crisis and the resulting credit crunch have not just been a wake-up call for lenders. They will be one for borrowers too.

The debt in this country has risen to an unstable level, yet UK consumers don't seem to have noticed. In the week before Christmas alone, it is reckoned they spent 2.1bn on credit cards. The majority of my property-investor clients, as opposed to people buying homes to live in, can see tears coming later this year. They are holding their capital in cash in the expectation of picking up other people's pieces for less.

They may be right. But I will be still be advising them to take out any mortgages with the big boys as, on the whole, they will be offering better rates and more security amid the sub-prime after-shocks.