Private banks are moving to
attract new clients by stepping into the vacuum caused by the
drying up of jumbo mortgages for higher-end properties.
Multi-million pound mortgages from many lenders are disappearing
fast as banks and building societies, nervous over the credit
crisis and wholesale funding drought, impose strict new limits on
how much they will advance.

Even where jumbo mortgages are available, some lenders are imposed
huge arrangement fees ranging up to £40,000, depending on the size
of the loan.

Among lenders, Abbey, Nationwide, Chelsea and Intelligent Finance
have all cut the maximum amount they will lend in recent weeks.
Mortgages for £2 million and more are still available at the
Halifax, Bank of Scotland, and Birmingham Midshires but now come
with steep arrangement fees.

Mortgage brokers John Charcol and advisory Clegg Gifford Private
Clients have reported problems in getting loans of more than
£500,000 from high-street lenders. As a result, clients seeking big
loans are advised to look to private banks, many of which are still
prepared to lend larger sums.

Despite a rocky UK housing market, the thirst for higher-end
mortgages shows no sign of collapsing. Over a third of brokers have
seen an increase in the number of mortgages they arrange over
£500,000 in the past couple of years, according to the Bank of

This is reflected in data from the Council of Mortgage Lenders
which show a 32 per cent increase in the number of mortgages over
£500,000 last year. The bank found 10 per cent of some 1,700
brokers surveyed derive over a quarter of their business from
high-net-worth clients.

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Up-market estate agency Savills Private Finance confirms private
banks are attracting new wealthier clients because of the credit
crisis. Since the collapse of Northern Rock, private banks have
benefited from clients with £1 million-plus mortgage requirements,
a spokesperson said.

When the mortgage market was more competitive the private banks
tended to charge a premium compared with the retail banks. Since
then, private banks have not really increased prices as a result of
the credit crunch, and certainly not to the same extent as the
mainstream market..

Specialists say that while private banks tend to want hefty upfront
administration fees, mortgage market conditions mean their home
loans are now competitive. In addition, private banks often try to
tie the client in by asking for deposits, the opening of bank
accounts and salaries paid in, to generate a broad stream of new

At Coutts, officials say its mortgage business is still almost
wholly targeted at existing clients. Its lending criteria include a
minimum loan of £25 million with no maximum, and up to 90 percent
of the value of the property.

Its variable rates range from 6.22 percent while its fixed rates
are “slightly better” than a year ago at 6.99 percent.

“If there was good potential for a new client, of course we would
look at a mortgage request but our business is primarily for
existing customers,” the officials added.