After the near collapse of the banking institution this week, HBOS, much of the market is concerned at the new “super bank” which has been formed under the umbrella of Lloyds TSB and whether it will help the floundering mortgage market.

On the first point, a super bank can not be good long term for the banking industry. Many feel that the Government was wrong to not refer the merger to the monopolies and Mergers Commission and that there will be mass redundancies and office closures in the future as it seems illogical to have so many banking halls in each high street owned by the same organisation. Obviously, reduced competition in the high street can only be a bad thing.

However, for the mortgage market, with some of Britain’s biggest lenders under the banner of Lloyds TSB (Halifax, Cheltenham and Gloucester, Birmingham Midshires), consumers about to re-mortgage could find deals are somewhat higher than expected as Lloyds now control much more of the market. With the additional collapse of the Lehman Brothers and a massive rescue package for AIG, it is expected that lenders will have to start increasing interest rates again, just after they have come down from the highs of this summer. This could work contrary to the Bank of England rate which is likely to come down in the near future as the bank tries to assist the economy.