Mortgage brokers and consumers may face a reduction in choice if the proposed merger between Abbey and Alliance & Leicester goes ahead, according to Moneyfacts.co.uk.
Earlier today, A&L confirmed it would recommend shareholders take the £1.25bn offer from Abbey owner Banco Santander.
Moneyfacts.co.uk’s mortgage experty, Darren Cook, believes the deal will help improve confidence in the UK mortgage market, but is concerned about the impact it may have on consumer choice.
“Historically, mergers in the mortgage market have worked out as more of a takeover of the mortgage book, with one company’s product range features disappearing altogether without bringing together the best of both product ranges,” he explains.
He says both firms offered fairly similar product ranges in terms of interest rates, though A&L utilized a percentage fee structure.
However, A&L’s range was also more accommodating, with large loans of up to £1m available, compared to just £550,000 at Abbey, and flexible overpayment and payment holiday features.
In addition, Abbey has a dedicated intermediary range, offered through Abbey for Intermediaries, wheras A&L offers the same range of products to intermediaries and direct through its branch network.
A spokesperson for Alliance & Leicester says talks are ongoing and it is too early to know what effects the deal will have on the mortgage ranges of the lenders involved.
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