In early 2026, many prime and high-net-worth borrowers are surprised to find that attractive headline mortgage rates from private banks come with an increasingly non-negotiable condition: a broader assets under management (AUM) relationship. While rates may appear competitive on paper, access to those terms is now frequently contingent on the borrower committing substantial liquid assets to the bank.
This shift is taking place against a clearly defined monetary backdrop. Following the Bank of England’s decision to hold the base rate in February 2026, interest rate expectations have stabilised, and private banks are no longer competing aggressively on mortgage pricing alone. Instead, they are reassessing how mortgages fit within their wider balance sheet strategy, capital allocation, and regulatory reporting requirements.
At Willow Private Finance, we are seeing an increasing divergence between borrowers who assume private bank mortgages operate like enhanced high-street products, and the reality of how these institutions now assess “relationship value”.
This article explains why private banks are prioritising AUM in 2026, how “total relationship value” is calculated in practice, and what this means for borrowers seeking prime finance.
Private banks entered 2026 facing a combination of margin pressure, regulatory oversight, and shifting client behaviour. Net interest margins have been compressed by competition and funding costs, while wealth management has become the primary driver of long-term profitability.
At the same time, regulatory capital treatment of residential mortgages, particularly large prime loans, has tightened. Mortgages are now assessed less as standalone profit centres and more as balance sheet assets that must justify their capital consumption through ancillary revenue.
According to recent commentary from major UK private banking groups, wealth inflows and retained client assets are now central to internal performance metrics. Mortgage lending, once viewed as a gateway product, is increasingly assessed on its ability to anchor wider banking relationships.
This has led to a recalibration of appetite. Private banks are still lending in 2026, but selectively. Borrowers with strong liquidity profiles and willingness to consolidate assets are favoured over those seeking transactional, rate-led solutions.
Private bank mortgages differ structurally from mainstream lending. They are typically bespoke, manually underwritten, and assessed holistically rather than through automated affordability models. However, this flexibility comes with expectations.
In practice, a private bank mortgage is rarely priced in isolation. Credit committees consider the anticipated lifetime value of the client, including investment management fees, custody income, FX activity, and ancillary banking services.
While borrowers may focus on loan-to-value or interest rate, private banks focus on return on equity. A low-margin mortgage can only be justified if it supports a profitable long-term relationship.
In 2026, this calculus has become more explicit. Banks are increasingly formalising AUM thresholds linked to mortgage size, even if these thresholds are not publicly disclosed.
The defining feature of private bank underwriting in 2026 is relationship depth. Banks want to see a meaningful proportion of a client’s liquid wealth under management, not merely pledged or disclosed.
AUM expectations vary by institution, but it is increasingly common for banks to expect assets equivalent to, or exceeding, the mortgage balance to be placed with them. These assets may include cash, investment portfolios, or discretionary mandates.
Liquidity quality also matters. Readily deployable assets are more attractive than illiquid holdings or concentrated positions. Banks prefer assets that generate predictable fee income and can be retained over time.
Importantly, this is not framed as a condition of lending in marketing material, but it is often decisive at credit committee stage.
A frequent misconception is that private banks offer cheaper mortgages because they “want the client”. In reality, they want the balance sheet relationship, not the loan.
Another challenge is assuming AUM can be placed temporarily. In practice, banks assess the likelihood of asset retention, not just initial placement. Short-term asset parking is increasingly scrutinised.
Borrowers also underestimate how quickly offers can be withdrawn if AUM expectations are not met during the onboarding process.
Finally, many borrowers approach private banks directly without understanding how their overall profile compares across institutions, weakening their negotiating position.
Many prime borrowers fixate on headline mortgage rates and only discover AUM expectations late in the process. By that stage, credit approval is often conditional, timelines are compressed, and alternatives are limited.
This sequencing error results in reactive decision-making: either accepting unfavourable asset transfer terms or losing the mortgage offer entirely.
At this stage, most successful borrowers involve a specialist like Willow Private Finance to sense-check the case before it reaches another credit committee.
Successful private bank borrowing in 2026 requires strategic positioning. This includes understanding which banks value which types of assets and aligning asset placement accordingly.
Splitting assets across institutions may preserve flexibility, but it can weaken individual relationships. Conversely, consolidating assets without negotiating lending terms can reduce leverage.
Borrowers benefit from presenting a coherent relationship narrative: why assets are being placed, how long they are likely to remain, and how the mortgage supports a broader financial strategy.
Sequencing is critical. Asset discussions should be aligned with credit submissions, not treated as an afterthought.
Consider a borrower seeking a £4 million prime mortgage. Two private banks quote similar rates. One requires £5 million of managed assets; the other requires £2.5 million but offers less flexibility on structure.
By assessing total relationship cost rather than headline rate, the borrower selects the second option, preserving liquidity while securing the loan.
This illustrates how AUM requirements can outweigh marginal pricing differences in real terms.
Private banks are unlikely to revert to purely transactional mortgage lending. As regulatory and margin pressures persist, relationship-led lending will remain the norm.
Borrowers who understand this shift, and prepare accordingly, will retain access to competitive finance. Those who do not may find private bank lending increasingly inaccessible, regardless of wealth.
Why are private banks placing so much emphasis on assets under management (AUM) in 2026?
Private banks are under increasing pressure to justify how they deploy regulatory capital. In 2026, a mortgage—particularly a large prime loan—consumes balance sheet capacity while delivering relatively modest margin. By linking lending to AUM, banks ensure the relationship generates recurring fee income through wealth management, custody, FX, and advisory services, making the overall client relationship economically viable over time.
How do private banks calculate “total relationship value” in practice?
Total relationship value is assessed holistically rather than through a single metric. Banks look at expected fee income from managed assets, anticipated longevity of those assets, cross-selling potential, and the stability of the client relationship. A low-margin mortgage may still be approved if the projected lifetime value of the relationship comfortably exceeds the bank’s internal return thresholds.
Is AUM a formal condition of lending or an informal expectation?
In most cases, it is not presented as a formal condition in marketing materials or term sheets, but it is very much a decisive factor at credit committee stage. Offers may be issued “subject to onboarding” or “subject to relationship completion,” which in practice means the mortgage is contingent on assets being transferred and retained. Failure to meet these expectations can result in delayed completion or withdrawal of terms.
Are AUM requirements the same across all private banks?
No. AUM expectations vary significantly depending on the institution’s balance sheet, funding model, and strategic focus. Some banks prioritise discretionary investment mandates, while others are satisfied with advisory portfolios or cash balances. This variation makes lender selection critical, as the same borrower profile can produce very different outcomes across institutions.
Can borrowers place assets temporarily to secure a mortgage?
This has become increasingly difficult. In 2026, private banks are far more focused on asset retention than initial placement. Credit teams assess the likelihood that assets will remain under management beyond the short term, and relationship managers are often required to evidence this internally. Temporary or transactional asset placement is now closely scrutinised and may undermine lender confidence.
How does this affect borrowers who prefer to keep assets diversified across institutions?
Diversification remains sensible from a wealth management perspective, but it can dilute perceived relationship value in a private banking context. Borrowers who spread assets too thinly may find that no single bank is willing to offer attractive lending terms. The challenge in 2026 is balancing prudent diversification with sufficient concentration to support lending objectives.
Are private bank mortgage rates still genuinely competitive once AUM is considered?
Headline rates can appear very attractive, but they must be assessed alongside the opportunity cost of asset placement. Management fees, custody costs, and potential underperformance relative to existing arrangements all form part of the real cost of borrowing. In some cases, a marginally higher mortgage rate from a non-private bank lender may result in a lower overall cost.
Do private banks treat regulated and unregulated mortgages differently in this context?
While regulatory treatment differs, the relationship-led approach applies to both. Whether a loan is regulated or unregulated, private banks still assess how it fits within their broader client strategy. The presence of AUM can influence flexibility, structure, and ongoing support regardless of the regulatory classification of the mortgage.
What is the biggest mistake prime borrowers make when approaching private banks in 2026?
The most common mistake is focusing solely on headline rate comparisons without understanding relationship expectations. Borrowers often discover AUM requirements late in the process, when alternatives are limited and timelines are compressed. This sequencing error can force suboptimal decisions or lead to withdrawn offers.
When should borrowers involve a specialist intermediary in private bank lending?
Ideally before approaching any private bank directly. Early involvement allows AUM expectations, relationship economics, and lender suitability to be assessed upfront. This preserves negotiating leverage and avoids unnecessary asset transfers or failed credit submissions.
Willow Private Finance works with high-net-worth borrowers navigating private bank lending in 2026. As an independent, whole-of-market intermediary, we assess AUM expectations, compare relationship economics across institutions, and manage credit sequencing.
Our role is to ensure borrowers understand the true cost of private bank mortgages, beyond headline rates, and structure relationships accordingly.
📞 Want Help Structuring A Private Bank Mortgage In 2026?
Book a free strategy call with one of our mortgage specialists.
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About The Author
Wesley Ranger is a senior mortgage and property finance specialist with over 20 years’ experience advising high-net-worth individuals on prime and private bank lending. He regularly works on transactions where asset placement, relationship value, and credit structure are as important as pricing. Wesley has extensive experience engaging directly with private bank credit teams and understands how AUM considerations influence lending decisions in practice.
Important Notice
This article is provided for general information and educational purposes only and does not constitute personal financial advice, tax advice, or legal advice. Mortgage availability, criteria, and terms vary by lender and may change at any time.
Examples and scenarios are illustrative only. Borrowing secured on property involves risk and failure to maintain repayments may result in repossession.
Willow Private Finance Ltd is authorised and regulated by the Financial Conduct Authority (FCA No. 588422). Registered in England and Wales.
