The UK arm of the Spanish bank says net mortgage lending rose 31% to £9.8bn last year, classing 85% of these loans as prime UK retail mortgages. The average loan to value of this lending was 50%, compared to 52% a year ago.
Last October, the bank launched its My Home Manager app for mortgage customers, allowing them to see the value of their homes, estimate mortgage balances, check energy performance certificate ratings and order home repairs.
However, the lender pointed out that following former Chancellor Kwasi Kwarteng’s tax-cutting mini-Budget in September, markets were volatile “causing mortgage rates to rise sharply, although they have subsequently eased.
“Higher base rates in 2022 added further pressure on households and businesses with a fall in gross domestic product in the third quarter of 2022.”
The bank adds: “While the outlook remains uncertain, a recession in 2023 seems likely. Inflation is forecast to remain above the 2% target rate, eroding real disposable income further.
“Utility bills for households and businesses are likely to remain higher than a year ago, despite the mitigation of the government’s energy price guarantee scheme.
“Household bills are also increasing, and house prices are starting to fall, adding to the challenges faced by the UK economy.
Santander UK chief executive Mike Regnier says: “The end of 2022 saw a marked slowdown in mortgage lending and, with an uncertain economic outlook for 2023, we will continue to focus on a prudent approach to risk while we help people and businesses prosper.”
The bank’s customer deposits lifted by £4.3bn to 196.5bn, following successful eSaver and ISA campaigns in the second half of 2022.
Its net interest margin — the difference between the interest it receives from loans compared to the amount it pays out in interest on deposits — increased to 2.06%, from 1.92% last year, reflecting the impact of a series of base rate increases from the Bank of England.
The lender booked credit impairment charges of £321m, “driven by the deterioration in the economic environment”, compared to £233m of write-backs a year ago.
