BRITAIN'S largest mortgage lender, Halifax Bank Of Scotland, will cut up to 425 jobs and shut one of its five mortgage brands to new business as the group positions itself for a shrinking loan market and a drop in house prices.

HBOS, which writes one in five new mortgages in Britain, has predicted house prices will fall by 15 to 20 per cent over 2008 and 2009.

From next week it will stop writing new loans at The Mortgage Business, which specialises in buy-to-let, self-certified and self-build loans. Its main specialist lender, Birmingham Midshires, will manage business previously written through TMB.

HBOS said the move, meaning 325 job cuts, would streamline its mortgage business, currently spread over five brands. It will also cut up to 100 jobs in IT.

From next month, HBOS will stop offering conventional mortgages via its Intelligent Finance online brand.

Future customers will need to open a current account, alongside a savings account, to qualify for a home loan.