Santander: London and south dominate mortgage book

Santander’s half yearly report has revealed that Greater London and south east England represent about 50 per cent by value of the lender’s total mortgage book.

In December 2011, Santander UK re-entered the buy-to-let market via the intermediary channel only, targeting new or small volume investor landlords.

The buy-to-let proposition has its own suite of policies against which every application is manually assessed by an underwriter unless it is declined by an automated system decision, and Santander stated the general principle behind the proposition is that it is self-financing.

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The report revealed buy-to-let mortgages accounted for 2.7 per cent by value of new mortgages so far during 2013, compared with 1.4 per cent in 2012.

According to Santander, the increase reflected the market trend in the growth of the buy-to-let market.

During the first half of 2013, the percentage of new business with a loan-to-value of greater than 75 per cent decreased from 34 per cent to 26 per cent, reflecting Santander’s continued goal of rebalancing the LTV mix.

Similarly, the average LTV on all completions decreased from 63 per cent to 62 per cent.

At 30 June 2013, 5 per cent of the retail mortgage portfolio was in excess of 100 per cent LTV.

This was unchanged from 2012, which Santander said was due to relatively stable house prices across the country as a whole.

During the first half of 2013, pricing strategies increased the proportion of new business with remortgagers from 23 per cent to 31 per cent, more in line with historic levels and the market.

Consequently, the proportion of lending to first-time buyers and home movers decreased.

Following LTV restrictions implemented in 2012, the proportion of new interest-only lending remained low compared to historic levels.

In addition, Santander confirmed the decision was taken to reduce the percentage of new business flexible loans which has now decreased to 8 per cent, compared with 14 per cent at the end of 2012.

The percentage of new mortgages that were both interest-only and flexible decreased to 2.5 per cent, compared with 5.3 per cent at the end of 2012.

During the first half of 2013, arrears levels increased slightly by £71m or 1 per cent to £5.44bn, compared with £5.37bn at the end of last year.

Santander stated this was primarily due to regulatory-driven policy and reporting changes implemented in early 2012.

Sntander stated: “These changes resulted in a tightening of forbearance policies leading to an increase in arrears stock.”