First-time buyer transactions accounted for £2.6bn of gross lending and 19,300 transactions while Help to Buy applications totalled £450m of gross lending to 3,100 customers.

In its half year results Santander reported its average loan-to-value was 65% for new lending and 49% for the book overall. Its average loan-to-income multiple stood at 3.1 times borrowers’ income which it said demonstrated its prudent approach to lending.

Net lending in quarter two this year increased by £1.1bn which the bank said was a ‘marked reversal of prior quarterly trends’ in line with its expectations.

Standard Variable Rate mortgage loan balances fell £4.2bn in H1 to £48.1bn. Santander hailed the reduction as a success in retaining and moving customers onto new mortgage deals.

Ana Botín, chief executive of Santander, said: “Our aim is to become the best bank in the UK, for our people, our customers, our shareholders and
the communities in which we operate, ensuring that everything we do is simple, personal and fair.

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“Our performance, with results once again ahead of plan, reflects the strategic transformation we initiated in 2011.”

Earlier this month Santander made changes to its affordability criteria and interest-only policy which it said demonstrated its responsible lending attitude.

From the 25 July any borrower choosing the Help to Buy government scheme has been prevented from using more than 4.5 times their income to support the application. For borrowers choosing an interest-only mortgage they must have a minimum of £150,000 of equity where the exit strategy is the sale of the property.

But the lender is now allowing Help to Buy equity loan customers to extend their mortgage over 35 years which will help borrowers keep payments down.

Previously the maximum loan term for this scheme was 25 years.