Mortgage lenders turn away rich for home loans

Even bankers are struggling to get mortgages from high street lenders, so tough have their requirements become in the fallout from the credit crunch.

High-flyers in the City are resorting to private banks to fund their home loans because they are getting less of their bonus payments in cash, causing nervousness among traditional lenders.

Bloomberg reports that lending by private banks jumped by 40% in the past year, according to Private Finance, a London-based broker that arranges mortgages worth an average £700,000. Bonus earners accounted for about half the rise, the broker said.

Katie Tucker, Private Finance's chief operating officer,said: "Mainstream lenders are shying away from anything that needs bespoke underwriting. The business has moved to the private banks because they can be flexible."

Cash bonuses paid to the 300,000 Londoners employed in finance and related services fell 60% to £4 billion in 2009, according to the Centre for Economics and Business Research.

Knight Frank Finance reports that the top 10 lenders to clients seeking loans of £1 million or more were private banks at the end of last year.