Virgin Money reports its mortgage book fell 2.2% from a year ago to £57.1bn, but adds that trading improved in January from the “subdued market” it saw over the last 12 months.
The high street bank says the current level of its home loan balances “reflects a disciplined approach to trading in a subdued market, early signs that market activity has improved in January, increasing back to 2019 levels”.
Its mortgage book is down 0.7% from the previous three months, while market share remains at around 3.5%, the lender says in a trading update.
The business points out: “Application spreads improved during the first quarter, despite customer pricing trending lower, but remained below the spread of maturing balances.
“The group is trading nimbly to optimise performance, including the launch of our innovative new ‘Fix and Switch’ range, along with our new premium broker service, delivering an enhanced experience and a larger pipeline of recommended cases.”
It adds: “There are early signs in January that market activity has improved, including market applications volumes more in line with 2019 levels within both residential lending and more recently buy-to-let.
“Looking ahead, the group expects customer sentiment in mortgages to continue to improve, given the emergence of more positive trends at lower customer rates.”
Its overall loan book came in at £72.8bn in the period, up 0.1% over the last three months, but down 0.3% from a year ago.
The bank’s net interest margin — the difference between the interest it pays to borrowers and what it receives from lenders – was 1.89%, unchanged from 12 months ago.
Its net interest margin benefitted from positive structural hedging reinvestments and strong credit card revenues, which offset spread pressure in mortgages and deposit competition and migration.
Virgin Money chief executive David Duffy says: “We have made a positive start to the year, with strong first quarter results in line with our guidance.
“We’ve delivered growth in new accounts, deposits and target lending segments, at stable margins and with ongoing cost efficiencies.
“We are encouraged by both our customers’ resilience and improving sentiment in the mortgage market as interest rates have peaked.”
