Today’s return to profitability at Lloyds Banking Group is not just big news for shareholders and the government but for housing too.
The news sent Lloyds shares up sharply and briefly above the price paid under the bailout that saw the government take a 41% stake in 2008. That’s good news for Gordon Brown ahead of the prime ministerial debate on the economy on Thursday since it increases the chances of the government making a profit on its stakes in Lloyds and Royal Bank of Scotland.
But what happens to Lloyds will also have a huge impact on housing: not just the housing market, but the private rented sector, social housing and housebuilding too. HBOS was already the biggest mortgage lender when it was forced to merge with Lloyds. The group was also the biggest lender to housing associations in general and on shared ownership in particular. It was one of the biggest lenders to buy-to-let landlords. And on top of that, it still holds major stakes in five of the top 20 housebuilders.
For the moment, Lloyds seems focussed on increasing the margins on its business - the gap between the interest rates it charges borrowers and pays savers - but in the longer term the return to the black should improve mortgage availability. Home loans in the market as a whole remain in short supply, according to today’s figures from the British Bankers Association (BBA).
It must improve the long-term prospects for shared ownership too - or at least it should once whoever forms the next government has sorted out their priorities.
In the meantime, and in an improving housing market, Lloyds seems focussed on improving its financial position by selling off its assets. Two stories in the financial pages this week show the potential impact that could have.
Yesterday, the FT reported that the bank had decided to sell the failed buy-to-let business built up by Grant Bovey (Mr Anthea Turner). Two separate sales will see a portfolio of more than 750 homes go on the market.
Over the weekend, various papers reported that a deal could be in the offing for housebuilder Crest Nicholson. HBOS took a stake in the firm during the boom but in the wake of the bust Lloyds led a consortium of lenders that wrote off its debt and took control.
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