Of this figure, £4.2bn went to just over 25,000 first-time buyers, while buy-to-let lending rocketed year on year from £5bn in December 2015 to £6.6bn.
The fall was even more pronounced on net lending, which dropped from £2.7bn to £1.5bn.
The bank said that strong net inflows during the first quarter of the year were driven by buy to let, while lower redemptions boosted the figure in the final quarter of the year. However, these flows were offset in part by “management pricing actions” – in other words, the bank increased mortgage rates covering certain areas of the market in which it didn’t want to compete.
Santander said it expected its net mortgage lending in 2017 to be “broadly in line with the market as we continue to focus on customer service in what remains a highly competitive market”.
Santander said it had built its buy-to-let book “by focusing on non-professional landlords, as this segment is closely aligned with residential mortgages and accounts for the majority of volume in the buy-to-let market”. In total, it completed 12,400 buy-to-let mortgages, accounting for 9% of the value of its new lending.
Mortgage retention stood at around 80%. This month Santander announced it would begin paying brokers a 0.2% procuration fee for retention business from later this year. It had previously angered intermediaries by writing to their clients six months ahead of mortgages expiring, offering them a new deal and to waive any Early Repayment Charges.
Overall profits before tax rose to £1.9bn from £1.3bn in 2015.
Nathan Bostock, chief executive at Santander, said the bank would continue to invest in new technology, including an end-to-end mortgage digital application process.
He continued: “We believe the transformation we have made in putting the customer at the heart of our business, coupled with a continued focus on costs and risk management, gives us solid foundations to succeed and confidence in the future.”