Morgan Stanley, Lehman Brothers and Merrill Lynch have been increasing links with UK lenders as the mortgage market on this side of the Atlantic continues to provide good returns.
However, this movement not only gives them a way of cashing in on the UK mortgage market but also a stepping stone onto the continent.
Bob Sturges, director of communications at Money Partners, commented: “It comes as no surprise to see an increased interest in the UK mortgage market from American banks. Equally, I would expect a number of US firms to use the UK as a springboard into the European market.”
Sturges’ comments are backed up by a report by Fitch Ratings, entitled ‘Non-Conforming Mortgage Lending in Europe’, which charts the increasing expansion of American companies across the English Channel.
The report highlights GMAC-RFC’s presence in a number of European countries, while the recent expansion of the Dutch non-conforming market has been backed by the likes of Citigroup, Lehman Brothers and Merrill Lynch.
With the US real estate market showing signs of weakness and many European markets judged to be 10 years behind the UK, this development of ties seems set to continue.
Mehrdad Yousefi, head of intermediary mortgages at Alliance & Leicester, said: “To some degree it depends on how the European Union’s legislation on liberalising the continent’s mortgage markets comes in. Perhaps if the banks take a long-term view they will see the returns in the emerging markets for Eastern Europe but in Western Europe, the mortgage markets are quite mature and the intermediary market isn’t quite as prominent as it is in the UK so they might not see the same benefits.”
