Contractor mortgage seekers may be interested to learn that the State Bank of India is expanding its UK retail division and entering into the mortgage market.
The bank is starting to offer buy to let mortgages from £50,000 to £1.5 million to landlords who can put down at least 40% deposit. Next year, it will launch a selection of residential home loan products and add intermediaries such as mortgage brokers and IFAs to its distribution network.
Last year, the SBI expanded its UK consumer banking business to target the mass market rather than just the Indian community.
A spokesperson for the bank explained that the UK mortgage market has changed over the past three to four years. Whereas it would not have been possible for the bank to compete back then, its prudent mortgage lending criteria means that a 60% loan to value buy to let loan is competitive in the current economic climate.
Dramatic changes have occurred in the British mortgage market since the collapse of Northern Rock. The lax regulatory system allowed lenders to grant 100%, and in some cases 125% mortgages to people who were unable to meet their repayments.
Since then, LTV ratios have dropped sharply and in July stood at an average 69%, according to data from the CML. We still have a muted market, with the total value of approved mortgages down 13% year-on-year in July and no doubt consumers will give a warm welcome to any new market entrant.
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