Mortgage lending data from the CML showed that the mortgage market’s giants still accounted for 84% of new lending in 2016, but they were experiencing different individual fortunes.
The CML added that a number of challenger banks and specialist lenders continued to make headway.
Gross lending overall in 2016 totalled £245bn, up 11% on 2015, which was a slightly higher rate of market growth than the 9% seen in the preceding year.
Lloyds Banking Group remained the largest mortgage lender in the UK but continued to shrink its market share, from 17.3% in 2015 to 15.6% last year. Santander also saw a contraction in market share, from 11.8% to 10.4%.
Moving in the other direction, Royal Bank of Scotland grew its share by 1.8% to 12.9%, rising one place in the table to become the UK’s third largest lender in 2016. Among the challengers, TSB Bank saw the most significant growth, increasing market share by 0.5% and moving up one place in the table to tenth position.
While the 10 largest firms continue to undertake the bulk of lending, smaller players made a noticeable contribution to lending growth, and are expected to continue doing so over the next two years. (see graph)
This contrasts with performance in 2015, when medium-sized lenders saw particularly strong growth, with a 56% increase in annual lending volumes. They accounted for 12% of total lending, compared to 8% in the preceding year.
In 2016, however, these medium-sized lenders saw a gentler rate of growth, and it was the turn of those in the next tier down – those ranked 21-30 by volume of lending – to forge ahead. These firms saw lending volumes grow by 60% in aggregate.
A number in this group saw a significant expansion of activity, said the CML. It highlighted Precise Mortgages with lending growth of 54%, Metro Bank (67%), Fleet Mortgages (150%) and Legal & General Home Finance (200%).
There was an increase in marketplace competition. Sixty lenders appear in the CML’s 2016 table for gross lending, below, up from 55 in the preceding year.
The very smallest firms – those with under £50m of lending – do not feature in the table. Virtually all CML members provided data, although a small number did not give permission to publish figures. The data included account for 97% of the total mortgage market.
The table below shows gross lending for all lenders who lent more than £50m in 2016.