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NatWest returns to private ownership but are red flags among lenders already emerging?

ended 02. June 2025

Following NatWest officially returning to private ownership after the government sold its final stake, 17 years after bailing out the collapsed Royal Bank of Scotland to the tune of £45.5bn, and the Chancellor, Rachel Reeves, saying this “turns the page on a significant chapter in this country’s history”, Newspage asked financial, mortgage and property market experts for their views at a time when the Government is urging regulators to tear down the regulatory barriers that hold back growth.

One warned: “While the Chancellor sees the NatWest divestment as the closing of a chapter, we are seeing familiar patterns return in the property market, including an increased lending appetite and the return of the 100% mortgage. Hopefully, this time is different and more safeguards are in place, but caution is still essential.” Another added: “The emergence of high LTVs and 7x income stretches does raise the prospect of another calamity for some lenders.” But a third was less convinced: "The comparison with the Global Financial Crisis feels overblown, frankly. Today's "loosening" is worlds apart from 2008's 125% Northern Rock madness and self-cert loans where borrowers needed zero income proof. Ring-fencing and responsible lending rules create guardrails that simply didn't exist before."

Views from verified experts below.

6 responses from the Newspage community

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Editor
Riz Malik
Independent Financial Adviser at R3 Wealth
Many of us remember not only the 2008 crash but also the warning signs that preceded it. While the Chancellor sees the NatWest divestment as the closing of a chapter, we are seeing familiar patterns return in the property market, including an increased lending appetite and the return of the 100% mortgage. Hopefully, this time is different and more safeguards are in place, but caution is still essential. Be warned or be damned.
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Bob Singh
Founder at Chess Mortgages
With the market gathering pace as confidence continues to grow, lenders need to have a good set of brakes ready to be slammed at the first sign of the economy overheating. A lot has been learnt from the past but prudence is still needed. Banks today are admittedly better capitalised and more able to withstand the shocks that previously brought them to their knees. The emergence of high LTVs and 7x income stretches does raise the prospect of another calamity for some lenders. The Government had no right to force the banks to lend lend lend when the plan had been to create a stable housing market. The end of the Help to Buy scheme is a clear admission of failure by the Government, to provide support for first-time buyers and instead encourage lenders to take on more risk. Maybe it's time to rip up the rule book and start again.
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Tony Redondo
Founder at Cosmos Currency Exchange
Financial cycles turn, and history rhymes. NatWest’s privatization, 17 years after its £45.5bn bailout, coincides with rising loan-to-value ratios, looser lending and tweaked stress tests—echoes of the pre-2008 cycle’s start. Are we nearing a crisis? Not yet, but the seeds, arguably, are being sown. Basel III, UK regulation and Bank of England stress tests offer a stronger safety net than 2008, yet 100% mortgages, high household debt, an overheated housing market, rising inflation and unemployment hinting at stagflation signal vulnerabilities. This isn’t 2008 redux, but it’s a warning. If self-certification loans return, those seeds will get the fertilizer needed to sprout a new crisis. Regulators must tighten rules, like LTV or loan-to-income caps, to prevent a painful correction, especially if shocks like geopolitical tensions or tighter monetary policy strike.
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Chris Barry
Director at Thomas Legal
The UK recovery in the years following the financial crisis was slow and cautious. Regulations were introduced to ensure banks held a 2/1 deposit to debt ratio, which would ensure banks would be able to pay out customers if they demanded their money at mass. Other European Commission laws were introduced, included separating the investment bank from the retail bank but this has sadly not been enforced and therefore could spell disaster once again, later down the line. RBS got greedy when purchasing ABN Amro, using debt, just before the credit crisis hit and this type of risky behaviour is unlikely to get approval whilst people still remember how horrific 2008 was for RBS customers, staff and investors. The UK seems safe for now, but a collapse in China would put us right back in hot water and far worse than the US trigger in 2007.
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Kundan Bhaduri
Entrepreneur, Investor and Landlord at The Kushman Group
I applaud NatWest’s full return to private ownership, as everyone will agree that taxpayers shouldn’t prop up banks indefinitely. But let’s not mistake this milestone for maturity. The £45bn bailout was a necessary evil in 2008, yet today’s lending landscape feels disturbingly familiar. Banks are again offering 95% loan-to-value mortgages, with some even pushing “stress-light” affordability checks. The taxpayer no longer has a seat at the table. That matters. Public accountability kept the banks grounded. Without it, the danger is a return to short-termism and risk-piling. The renowned philosopher John Stuart Mill reminded us that institutions must restrain impulses when public trust is at stake. The question now is whether regulators have the spine to do what the board in its myopic view won’t.
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Sean Horton
Managing Director at Respect Mortgages
The comparison with the Global Financial Crisis feels overblown, frankly. Today's "loosening" is worlds apart from 2008's 125% Northern Rock madness and self-cert loans where borrowers needed zero income proof. Ring-fencing and responsible lending rules create guardrails that simply didn't exist before.