Council of Mortgage Lender total gross mortgage lending figures for 2015 showed several high street giants losing ground to December last year, including Lloyds, Santander and Barclays.
Mortgage lending hit £220bn, up 8% on 2014, according to the mortgage lending trade body, whose membership covers 93% of the market.
Competition between lenders grew and 2015 saw several new-launch lenders including Legal & General Home Finance and Axis Bank, with other mid-sized technology-driven providers like Virgin Money and Metro Bank clawing their way into the market to upset the status quo for the first time.
The first graph below shows a market share contraction from some of the largest lenders, with medium-sized firms, most notably those ranked 11th to 15th, acquiring share. This continues a trend seen since 2010.
As a whole, challenger banks and specialist lenders increased gross lending by 56% in 2015, which brought a 2.9% growth in collective market share. In contrast, retail banks and mutuals increased their gross lending by 4 and 9% respectively.
In the top five, Royal Bank of Scotland increased its gross lending by 25% in 2015, moving up from fifth to fourth spot in the UK lending table. Nationwide, the second biggest lender also edged its market share upwards from 13.3% to 13.9%.
However, most of the biggest moves came from the challenger banks and specialists (see table below). Of 16 lenders in this category, 11 moved up the table, including Metro Bank, whose 200% growth in lending last year saw the most rapid ascent up the table, from 24th to 16th spot.
Virgin Money jumped from 9th place to 8th after lending £7.5bn up from £5.8bn in 2014. TSB was another big gainer rising from 14th to 11th and lifting share from 0.7 to 2.2% over the year.
Further down the table, Legal & General Home Finance, which launched last year and Harrods Bank both leapt from 49th place to 30th with around £200m each.
The CML said: “Overall then, 2015 was a year where the mortgage market grew yet more competitive. Seen against a backdrop of a range of government policies looking to boost home-ownership, this increase in diversity and choice is clearly welcome.
“Many lenders’ interim results published so far point to continuing healthy growth, in line with industry data showing lending in the first half of 2016 at its highest level since 2008.”
However, it said prospects for the mortgage market are, like any other sector of the UK economy, less certain than they were at the start of the summer.
“But our market has a robust and diverse base to support existing and aspiring home-owners and investors alike as we move forward,” said the CML.