However, growth returned in the second half of the year, with net lending increasing by £0.1bn as levels of redemptions reduced.
There was 7% growth in owner occupied net loans to £2.3bn, with originations increasing to £0.6 billion as products were temporarily withdrawn to manage risk appetite and operational capacity during the pandemic were re-launched to market.
The majority of growth was in the higher LTV products, offered to customers through enhanced underwriting and risk-based pricing.
Growth in owner occupied was offset by a reduction in the BTL book, which reduced 5% in the year to £4.9bn largely reflecting the expected maturity of a five-year fixed portfolio combined with high levels of competition in the market.
However, originations were 43% higher at £0.5bn as the group launched a number of limited edition products over the year and loyalty product switches reached the highest ever level at £0.8bn, following investment in the loyalty team and proposition in 2021.
The housing market is expected to slow this financial year as rising interest rates and high inflation squeeze household incomes.
House prices have remained resilient to date supported by limited supply and supportive fiscal policy however, Aldermore says it now expects “a modest decline in house prices over the next 12 months”.
Aldermore says the development of new owner occupied propositions and higher levels of activity in BTL may offset this pressure, particularly as landlords look to take advantage of strong tenant demand and higher rental prices.
It was also reported that net lending grew by £1.3bn to £14.7bn in its full year results to 30 June.
The group delivered 30% growth in profit before tax from £157.8m to £204.7m. The bank is now supporting a record 750,000 customers which it says has helped drive 10% growth in net lending at improved margins and at a stable cost of risk.
Aldermore Group chief executive Steven Cooper says: “This has been a positive year for Aldermore with significant growth in net lending and profits, resulting in a good performance, despite a challenging economic environment.”
“We are pleased to have seen a strong increase in new owner occupied lending as we continue to help more people realise their home ownership dreams.”
“We understand that the cost of living crisis has placed real pressure on people and their families and businesses in recent months. Our strong profitability and capital position mean we’re on hand to support those who are facing difficulty.”
Cooper says the group has “recently undertaken a strategic refresh of our business”, which he believes will provide an “opportunity for growth and better returns”.
