In place of this, HBOS will make monthly judgements on the trade-off between volume and margins in efforts to deliver the optimum balance between volume, margin and credit risk.
Andy Hornby, HBOS CEO said: “The days of HBOS being a mortgage bank are long over. We are now a well diversified full range financial services provider."
Louise Cuming, head of mortgages at moneysupermarket.com said of the move: "“The credit crunch has hit many lenders hard, especially those involved in specialist lending, and HBOS has some exposure to this through its BM Solutions brand.
"This shift by one of the UK’s biggest mortgage lenders could be the start of a more defined period of polarisation, with lenders falling over themselves for some applicants, while declining others or only offering them a very high price. Lenders are already tightening their attitude to risk and hiking up the rates for the riskier categories of lending.
“The result of all this will be two-fold. First-time buyers will find it harder to get a foot on the ladder, with lenders only recognising the very safest applicants, while existing homeowners experiencing financial problems will find it increasingly difficult to ‘borrow’ their way out of trouble.
“Traditionally this slack would have been picked up by investors snapping up properties for buy-to-let but, as interest rates rise and rents don’t, landlords at best will have a wait-and-see approach and, at worst, may cut and run.
“At the other end of the food chain, borrowers with a strong credit profile, stability of employment and good earnings should find it increasingly easy to get a mortgage as lenders compete for their business. So we may well see a borrowing hierarchy with the new 'underclass' losing out heavily.”
