Barclays saw new home loans tumble by a quarter to £22.7bn from a year ago, hit by “subdued mortgage lending amid lower market demand,” reports the retail and investment bank.

However, its home loan book slipped just 0.9% to £160.9bn, following the completion of its purchase of Kensington Mortgages last March, which included a £2.2bn mortgage portfolio.

The lender said in its full-year results: “New home loan bookings in 2023 decreased 25% to £22.7bn and the 90-day arrears rate increased to 0.2%, mainly driven by economic conditions that resulted in general mortgage market suppression, including higher mortgage payments as rates continued to rise and increased cost of living factors in line with inflation in 2023.”

Overall, the bank posted a 6% fall in annual profit to £6.6bn, as higher interest rates and strong credit card performance were offset by restructuring charges and mortgage margin pressure. Profit was in line with analyst’s forecasts.

The lender also promised to cut £2bn of costs from its operation, return £10bn to shareholders by 2026, and invest in its high-returning UK retail bank.

Barclays chief executive C. S. Venkatakrishnan said the firm “delivered [a] solid performance against a mixed macroeconomic backdrop”.

AJ Bell investment director Russ Mould adds: “The banking sector got an initial boost from the rising interest rate environment as that created an opportunity to make more money on loans. 

“Yet, the sector has lost momentum of late as the market starts to price in interest rate cuts.

“Like many of its peers, Barclays is a big juggernaut of a company where it is very hard to make changes quickly.”