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Virgin Money gross mortgage lending falls as competition bites

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  • 26/07/2018
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Virgin Money gross mortgage lending falls as competition bites
Virgin Money’s gross mortgage lending in the first half of 2018 tumbled, as the competitive market took its toll.

 

The bank’s reported gross lending of £2.8bn in the six months to the end of June, is down from £4.3bn in the same period of 2017.

The lender said it focused on maintaining “the right” margins and quality, despite the ongoing competition.

New products and expansion of Virgin Money’s proposition helped offset some of the market pressure.

Direct customers now make up 13.3% of new mortgage applications up from 10.4% in the first half of 2017.

The lender said it also retained 72% of customers with maturing fixed rate or tracker mortgage products.

The launch of a portfolio landlord proposition, the extension of shared ownership, and new seven and 10-year fixed-rate products also expanded Virgin’s Money’s market reach.

As a result, the lender reported a mortgage pipeline of £2.2bn, compared to £1.4bn at year-end.

And mortgage balances in the first half grew by 1.2% to £34.1bn.

 

Mortgage approvals and housing supported by market

Virgin Money’s underlying profit before tax increased by 10% to £141.6m, from £128.6m a year earlier.

In a results statement, Virgin Money said: “We continued to invest in the mortgage franchise to deliver new products, support our intermediary partners and develop our customer proposition, all within our existing portfolio risk appetite.

“This enabled us to optimise margins and mitigate some of the competitive pressures in the mortgage market.”

The lender said the strength of the UK labour market, wage growth and ongoing low mortgage rates continued to underpin mortgage approvals and the housing market.

In June, Virgin Money agreed to a £1.7bn takeover by Clydesdale and Yorkshire Bank owner CYBG.

Jayne-Anne Gadhia, chief executive said: “I am delighted to report that our customer-focused strategy of growth, quality and returns continued to drive strong financial and operational performance during the first half of the year.

“The recommended offer made by CYBG for Virgin Money in June reflects confidence in our strategy, our track record of delivery and the complementary models of the two businesses and will accelerate the delivery of our strategic objectives,” she added.

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