Mortgages  

Santander reports drop off in mortgage lending

Santander reports drop off in mortgage lending

Residential mortgage gross lending at Santander was £5bn for the first three months of 2015 compared with £5.7bn for the same period a year ago.

Bosses at the banking giant said “the small fall in mortgage balances was the result of weak application volumes in the fourth quarter of 2014.”

The bank reported a profit before tax of £470m for the first three months of this year, up 13 per cent on the start of 2014.

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SVR mortgage loan balances fell £2.1bn to £41.8bn, although bosses stated the bank has been successful in retaining 35,000 customers - around 80 per cent - with maturing products on Santander UK mortgages.

An average loan-to-value (LTV) of 65 per cent was maintained on new lending, including Help to Buy, and 47 per cent on the stock of mortgages.

Help to Buy comprised all of the lending with an LTV greater than 90 per cent, with demand higher than expected since its inception.

Excluding Help to Buy, the average LTV on new lending was 64 per cent, and lending with an LTV of more than 85 per cent accounted for 18 per cent of the new business flow, of which 15 per cent was Help to Buy.

Stock LTV continued to perform well, according to bosses, supported by house prices increases and the better economic environment facilitating capital repayments by borrowers.

Nathan Bostock, chief executive of Santander, said net mortgage lending was set to grow in line with the market for the rest of the year.

He said the bank expects the decline in SVR mortgage balances, which reduced by a net £2.1bn in the first quarter of 2015, to continue but at a slightly slower pace during the year.

Mr Bostock: “I am pleased to report a good start to the year.

“The UK economy continues to be supportive of our business in 2015. We await further clarification on the regulatory landscape this year, in relation to capital, leverage, conduct and banking structure.

“Early completion of these reforms, in a proportionate way, will help us to contribute fully to the UK’s ongoing economic recovery.”

emma.hughes@ft.com