OSB Group aims to grow its underlying net loan book by around 5% this year, despite forecasts that the mortgage market will fall by 15% in 2023, according to its annual report.
The lender says it expects to see remortgages and professional landlords outperform the market, even though trade body UK Finance predicts that the home loan market will fall by 15%, due to higher inflation and interest rates this year.
The group includes a variety of brands — including Kent Reliance for intermediaries, Precise Mortgages and Charter Savings Bank — which operate across residential, BTL and bridging loans, as well as retail savings.
OSB Group chief executive Andy Golding says: “Remortgaging is expected to outperform purchasing activity, supported by an increased level of fixed-rate mortgages due to end during the year.
“The BTL segment is also predicted to see a reduction in lending following a strong 2022.”
But Golding adds: “While part-time landlords may be more sellers than buyers in the year ahead, professional landlords, who comprise the majority of the group’s lending, remain active buyers and are looking favourably at opportunities supported by continued strong tenant demand and rental growth.
“Affordability challenges will be evident in all lending segments resulting from the combined effects of inflation and higher interest rates. This is particularly the case for first-time buyers in the residential segment and also for amateur landlords.
“However, professional multi-property landlords have benefitted from increases in rental yields and strong tenant demand.”
Last month, the firm posted that its pre-tax profit lifted 14% to £531.5m last year, due to higher mortgage loans, an improved net interest margin and fair value gains.
The group said that “strong demand” for home loans across its core BTL and residential segments helped organic originations jump 29% to £5.8bn in the year to 31 December on a year ago.
Overall, its statutory net loan book increased by 12% to £23.5bn, while its statutory net margin interest lifted to 278 basis points, from 235bps, due to eight Bank of England interest rises during the period.
It added that its underlying net margin interest – the margin between what it earns on loans and advances and liquid assets after swap expenses, income and its cost of funds — in 2023 “is expected to be broadly flat” compared to the last 12 months, as it plans to issue debt, subject to market conditions.
