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Nationwide "is firing a shot across the bows of Halifax with this acquisition"

ended 07. March 2024

Nationwide is set to buy Virgin Money in a £2.9bn deal that would put it in a serious position to challenge the UK's major banks. Newspage asked brokers what this could mean for borrowers and the wider mortgage market. One said: “Nationwide is firing a shot across the bows of Halifax with this acquisition, threatening their status as the UK's number one mortgage lender by market share”. Another added: “I can guarantee you that brokers across the land are praying Nationwide ditch the Virgin Money application system sharpish.” A third said: “This is quite the power play by Nationwide.” The views of brokers can be found below.

12 responses from the Newspage community

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Ben Perks
Managing Director at Orchard Financial Advisers
This is quite the power play by Nationwide. This is a merger that could be greatly beneficial for the consumer, as while both lenders have decent systems and processes and they have differing criteria. If they can take the best bits from both we would have quite a formidable option available to borrowers. On the flip side, with this merger and the talks between Coventry and Cooperative, it looks like the number of lenders available to borrowers will reduce in 2024. Is this willingness to sell up due to Consumer Duty? Whatever the reason, at a time when borrowers need as many options as possible, it’s a shame to see lender numbers reducing.
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Graham Cox
Director at Bridging Hub
Nationwide is firing a shot across the bows of Halifax with this acquisition, threatening their status as the UK's number one mortgage lender by market share. Nationwide's reach will also increase banking competition on the high street, which can only be a good thing for consumers, given how complacent some of the established banks are.
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Richard Jennings CeMAP
Founder & Managing Director at Richard Jennings Mortgage Services
This move from Nationwide will remove two lenders from the market as Virgin Money operates under the Clydesdale bank banner, too, each with their own lending risk profile and niche client markers. What it does continue to demonstrate is the strength of the building society model. I imagine it will take some time to fully integrate fully but once done this will provide Nationwide with a much larger market share. For borrowers, however, this further reduces competition in the market, which can only be a negative.
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Riz Malik
Independent Financial Adviser at R3 Wealth
We need more competition in the mortgage market, not less. With two different styles of mortgage lending, it will be interesting to see what emerges from this acquisition. However, given the outlook for the housing market after yesterday's damp squib of a Budget, we may see further consolidation as more lenders are forced to compete for a smaller market.
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Justin Moy
Managing Director at EHF Mortgages
Consolidation within the mortgage market is inevitable when thin margins and reduced application numbers are set to continue for a long period of time. This will inevitably reduce competition in the residential market, potentially costing borrowers over the long term, and with the different borrower focus of each lending brand it will be interesting to see what Nationwide would focus on. This could trigger further consolidation or make space for new innovation from smaller lenders eager to grab some market share.
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Katy Eatenton
Mortgage & Protection Specialist at Eatenton Finance
It will be interesting to see how this plays out as both lenders' criteria are very different and Virgin Money is one of very few that have a more favourable approach to calculating self employed income for limited company directors. Will it mean they also take Clydesdale in the deal?
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Ranald Mitchell
Director at bad credit mortgage specialists Charwin Mortgages
Nationwide are making a bold move with the acquisition of Virgin Money. One way to increase market share is to buy competitors rather than slog it out at the retail end of the market. In difficult times, consolidation and mergers become more prevelant, reducing competition and ultimately less choice for consumers.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
The markets seem to like the prospect with Virgin shares up more than 30% in early trading. This could mean they suspect Nationwide paying a premium. Virgin are, relatively, small fry. And although this will add to a larger lenders loan book to challenge Lloyds Banking Groups position as largest lender, it doesn’t really make a dent. In an industry ripe for innovation, this will only stifle it.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
Nationwide are showing their ambition of growth by this reported acquisition, but will their members see it as a good use of their money? Virgin are usually a lender of requirement rather than choice, with awful systems. So it will only be the loan book of any value to Nationwide.
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Akhil Mair
Director at Our Mortgage Broker
The acquisition of Virgin Money by Nationwide could shake up the UK's banking landscape for the better and be a boost for mortgage borrowers. We encourage more mergers and acquisitions in the financial sector as they often lead to better offerings and benefits for consumers.
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Gareth Davies
Director at South Coast Mortgage Services
I didn’t see this one coming. They’re two institutions with completely contrasting approaches to lending, so it will be interesting to see what changes are made moving forward. I can guarantee you that brokers across the land are praying Nationwide ditch the Virgin Money application system sharpish.
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Gary Bush
Financial Adviser at MortgageShop.com
There are two sides to this coin. My first reaction is that we need the number of lenders to grow not contract, as consolidations remove that competitive edge and lessen the variety of underwriting conditions and choices available to consumers. On the other side of the coin, Virgin has been promising its partner finance companies a new IT system to process transactions on for over five years and it demonstrated to those in the know that they didn't really feel they were in the game for the longer term. Virgin Money's current systems are like using a dial-up modem from 1999.