Banks Target Wealthy Home Loan Customers

Mon, 19 Apr 2010

Short of loosening their credit criteria, banks are targeting wealthy borrowers with their latest home loan deals. Banks are making use of their private banking units rather than their high street retail banks, with the Royal Bank of Scotland just one of a number of banks to accept a higher proportion of loan applications through its Private division than its retail banking unit.

This month, the Lloyds-owned Cheltenham &Gloucester has cut the cost of its fixed rate mortgages by a whopping 1.9 per cent for consumers borrowing over £1 million. Interest rates on loans of between £1 million and £2 million now stand at 3.99 per cent, though borrowers must have a 40 per cent deposit.

The new targeting of wealthy borrowers appears to be a safe way of meeting mortgage lending targets by the nationalised banks, following promises made in last month’s budget. Lloyds pledged net lending of £3 billion, while RBS committed to lend £8 billion.

Other banks are also demonstrating a willingness to approve credit for wealthy borrowers, with Barclays offering low rates and flexible terms to high income borrowers.
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