Government-backed lender has doubled share of new business since credit crisis and says it has funding to lend more
Royal Bank of Scotland is recruiting new mortgage advisers and has started advertising to first-time buyers and movers.
Royal Bank of Scotland has declared its intention to be a key player in the UK mortgage market, with a target of increasing its market share by half over the next few years.
The government-backed lender has already doubled its share of new business since the onset of the credit crisis, and is now granting more than one in 10 new loans. Its head of mortgages, Moray McDonald, said the plan was to increase that further.
"With the franchises we have in RBS and NatWest I would be really happy to see our share to grow to the mid-teens," he said. McDonald said that level of market share was "a multi-year goal", but "we have the funding and the balance sheet to lend more".
The bank has started to recruit new mortgage advisers, has launched an advertising campaign encouraging would-be borrowers to ask for loans and reduced rates on loans for first-time buyers and movers. It was an early user of the government's Funding for Lending scheme, launched last August, withdrawing £750m in the third quarter of 2013.
McDonald has been working with the government on its latest housing market stimulus, helping with the design of the second part of the Help to Buy scheme, which is set to launch in January 2014 and will offer taxpayer guarantees to lenders willing to offer mortgages of up to 95%. He said he was confident the scheme would get widespread take-up among lenders and would boost lending above 90% loan to value.
"There is obviously a risk of [the market] overheating," he said. "But the government is looking to pull forward borrowing that would have taken place anyway in a few years' time. If this means someone is able to get on with their lives, rather than wait, that will be a good outcome."
He said details of how the scheme would work still needed to be ironed out, with one issue the treatment of larger loans on lenders' books. "If lenders have to carry higher capital for the loans as well as paying a premium for the guarantee then it is not going to work," he said. "We are hoping that [new watchdog] the Prudential Regulation Authority will agree."
David Hollingworth of mortgage broker London & Country said RBS had launched competitive rates that backed up its intention, including a two-year fixed-rate mortgage at 1.74% with a £1,995 fee. "These big fees and low rates are about grabbing attention," he said. "For some period they have been out if the game and it is great to have them back and with more appetite."
The bank was the fifth biggest lender in the UK in 2011, the last year for which figures are available. Several of the bigger players have also signalled that they intend to increase lending over the coming months, and Nationwide building society has already seen its share grow to a record 15.1%.
The government-backed lender has already doubled its share of new business since the onset of the credit crisis, and is now granting more than one in 10 new loans. Its head of mortgages, Moray McDonald, said the plan was to increase that further.
"With the franchises we have in RBS and NatWest I would be really happy to see our share to grow to the mid-teens," he said. McDonald said that level of market share was "a multi-year goal", but "we have the funding and the balance sheet to lend more".
The bank has started to recruit new mortgage advisers, has launched an advertising campaign encouraging would-be borrowers to ask for loans and reduced rates on loans for first-time buyers and movers. It was an early user of the government's Funding for Lending scheme, launched last August, withdrawing £750m in the third quarter of 2013.
McDonald has been working with the government on its latest housing market stimulus, helping with the design of the second part of the Help to Buy scheme, which is set to launch in January 2014 and will offer taxpayer guarantees to lenders willing to offer mortgages of up to 95%. He said he was confident the scheme would get widespread take-up among lenders and would boost lending above 90% loan to value.
"There is obviously a risk of [the market] overheating," he said. "But the government is looking to pull forward borrowing that would have taken place anyway in a few years' time. If this means someone is able to get on with their lives, rather than wait, that will be a good outcome."
He said details of how the scheme would work still needed to be ironed out, with one issue the treatment of larger loans on lenders' books. "If lenders have to carry higher capital for the loans as well as paying a premium for the guarantee then it is not going to work," he said. "We are hoping that [new watchdog] the Prudential Regulation Authority will agree."
David Hollingworth of mortgage broker London & Country said RBS had launched competitive rates that backed up its intention, including a two-year fixed-rate mortgage at 1.74% with a £1,995 fee. "These big fees and low rates are about grabbing attention," he said. "For some period they have been out if the game and it is great to have them back and with more appetite."
The bank was the fifth biggest lender in the UK in 2011, the last year for which figures are available. Several of the bigger players have also signalled that they intend to increase lending over the coming months, and Nationwide building society has already seen its share grow to a record 15.1%.
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