HSBC UK posted £2.6bn of new mortgage lending over the first six months of the year, as the bank said it saw higher home loan balances but was hit by “competitive mortgage pricing”.  

The UK arm of the international bank said its loans and advances grew by 3% in the first half of the year from December, “with growth from mortgages and commercial lending, growing market share modestly”.

It added that the average loan-to-value ratio on new lending was 68%, compared with an estimated 53% for the overall mortgage portfolio. 

The UK bank said that Bank of England base rate cuts of 50bps this year to 4.25%, come “amid concern that the weaker global backdrop may affect UK growth and employment, despite continued domestic inflation risk.  

It added that the current level of UK inflation, at 3.6%, remains above the BoE’s 2% target, “and UK consumers continue to face the pressure of ongoing high prices.  

“We remain mindful of the impact on our mortgage customers from higher monthly repayments driven by interest rates that are expected to remain higher than prior to the Covid-19 pandemic.  

“Higher rates may reduce loan demand across key consumer and business segments, which could lead to a deterioration in credit quality and weigh on real estate and other asset prices.” 

The UK bank posted a pre-tax profit of £3bn, down 7% on a year ago, on revenue of £5.1bn, up 4% over the same period. 

Overall, Europe’s largest bank reported a 26% slump in first-half pre-tax profit to $15.8bn (£11.8bn), hit by write-downs from exposures to a Chinese bank and Hong Kong real estate, as the group pushes ahead with a global restructuring.  

HSBC group chief executive Georges Elhedery said: “We’re making positive progress in becoming a simple, more agile, focused organisation built on our core strengths.”