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Banks try to win homebuyers' hearts - but will they commit?

A restaurant occupies the Grade II-listed Art Deco banking hall of the former Lloyds Bank HQ at 14 Cornhill, one of the hundreds of temples of Mammon that are now dedicated to drinking or gastronomy.

The City types eating breakfast or lunch amid the marble splendour of Cornhill (or any other of the Square Mile’s banking halls that serve today as brasseries or bars) probably know that many banks are planning a permanent return to mortgage lending practices akin to those of yesteryear. The mores of the marble banking hall, which fell out of favour in the last decades of the 20th century, are set for a comeback, with a 21st-century name — “relationship banking”.

For homebuyers, enjoying a cappuccino in converted bank branches elsewhere, this is likely to mean making a long-term commitment to one bank, which will, in due course, reward this loyalty with a mortgage. These homebuyers may not share the banks’ feelings on this issue. For the sentiments that lie behind relationship banking are not quite the sort that could be inscribed on a Valentine’s card.

Banks would like people to pay a higher price for all products, including mortgages. The past low profitability from these mundane activities led the banks into disastrous affairs with high-risk ventures such as sub-prime debt. But (or so they claim) they will not be tempted to stray again, if customers accept that deeply discounted home loans will not be available. This reasoning may be lost on homebuyers who are already footing the bail-out bill for the banks’ sub-prime excesses through higher taxes.