Santander mortgage lending slumps

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Santander UK says its mortgage lending slumped by £10.1bn in the first nine months of the year, amid “a slower housing market and higher mortgage rates”.  

The bank says the easing home loan market led to a fall in mortgage applications in the nine months to the end of September, causing it “to optimise its balance sheet given higher funding costs”.  

Its mortgage book fell to £177bn from £187.1bn at the end of last year, the business reported in its nine months results.  

The firm adds: “We expect high-for-longer interest rates to have a more pronounced impact on households and businesses.”  

However, the UK arm of the Spanish-owned bank reported profit up 16% to £1.73bn over the first nine months compared to a year ago, “largely driven by base rate increases and active management of our balance sheet”.  

Its net interest margin over the period — the difference between what it charges to borrowers and what it pays out to savers — rose 19 basis points to 2.23%. But adds that this ratio “is likely to peak” this year.  

The bank posted its results along with Lloyds Banking Group today, while Barclays reported its financials yesterday.     

Major UK banks have reported a run of strong profits buoyed by Bank of England base rate rises that have lifted 14 times since December 2021 to 5.25%.        

However, investors are concerned about tougher competition for savers’ cash and potential loan defaults in a cost-of-living crisis have weighed on the sector.  

The bank says it has “seen a slight increase in mortgage, unsecured personal loans and overdrafts arrears in recent quarters,” but adds that “early and late arrears remain at low levels”.  

Its mortgage arrears at 0.74% remain below the pre-Covid-19 average of 1.31%.  

Santander UK chief executive Mike Regnier says: “We have delivered a good set of results in spite of a challenging macroeconomic environment.   

“We provided competitive rates for savers, including a top-of-market easy access savings account, and helped homeowners struggling with rising rates, through the government’s Mortgage Charter.”   

NatWest will be the final major UK bank to report its results on Friday.      


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