moneysupermarket.com comments on HBOS and Lloyds TSB

Commenting on the effect a merger between HBOS and Lloyds TSB would have on the mortgage market, Louise Cuming, head of mortgages at moneysupermarket.com, said: "Between the two giants of British Banking they control six major mortgage brands - Lloyds, Cheltenham & Gloucester, Halifax, Bank of Scotland, BM Solutions and Intelligent Finance. We need to wait and see how many of these survive the merger. Obviously if some of these disappear, customer choice and competition will be eroded, which can only be to the detriment of borrowers.

"Lloyds have always run a very conservative ship and I have no doubt the merged operation will have a diminished appetite for higher risk specialist lending. This could leave borrowers without a squeaky clean credit rating or a large deposit without a hope of being accepted by the new ‘super bank'. Therefore, the slightly riskier part of the housing market populated by first time buyers and sub prime borrowers is set to stagnate even further, which won't be good for the market as a whole.

"On a positive note, there is no doubt consumer trust in the mortgage industry is extremely fragile, and the merger could go some way to restoring consumer confidence."