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Barclays mortgage lending drops £400m as LTVs rise

  • 01/08/2019
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Barclays mortgage lending drops £400m as LTVs rise
Barclays completed £11.1bn of new mortgage lending in the first half of 2019, down £400m from the same period last year.


However, the lender’s emphasis on targeting first-time buyers and other high loan to value (LTV) customers was illustrated with 14.3 per cent of new lending completed at higher than 85 per cent LTV.

This was up from 8.9 per cent of completions at high LTVs in the first six months of 2018, and was shown with a rise in the average LTV on new home loans to 67.1 per cent from 64.4 per cent.

“The value of home loan completions was lower than H1 2018 for both residential and buy to let (BTL),” the lender said.

“The reduction in residential was driven by a significantly lower value of business written in January, with Q2 higher year-on-year. The proportion of new home loan completions associated with BTL remained stable year-on-year at 17 per cent,” it added.

The overall mortgage book grew by £1.8bn, mainly driven by buy-to-let lending.


Increased mortgage refinancing

Barclays also witnessed the intense competition within the mortgage market as its net interest margin (NIM) decreased 13 basis points to 3.11 per cent, which included “increased refinancing activities in mortgages”.

This cut personal banking income by four per cent taking it down to £1.9bn.

Overall, Barclays UK’s profit before tax was £1.1bn, up from £800m in H1 2018, while the wider Barclays Group profit before tax was £3bn, significantly up from £1.7bn.


Building mortgage balances

Group CEO James Staley said it was another resilient quarter of performance and for the second quarter in succession it generated an attributable profit of more than £1bn.

“Our reported CET1 ratio increased by 40 basis points in Q2 to 13.4 per cent, demonstrating the strong capital generation capacity of the business,” he said.

“Barclays UK continued to build its mortgage and deposit balances, with stable credit metrics. This has partially offset the reduction in net interest margin from increased levels of customer refinancing and lower interest earnings from UK cards balances.

“Digital engagement with our UK customers is at an all time high, with just under eight million customers now active on the Barclays app,” he added.


Product changes

Barclays also announced a series of product and rate changes across its residential, buy to let and reward ranges which will go live on 2 August.

It is introducing a five-year fix for residential purchase and remortgage at up to 80 per cent LTV with a £999 product fee at 1.98 per cent for loans up to £1m.

Rates will be cut on 14 products by up to 0.07 per cent.

Meanwhile three residential two-year fixes are being withdrawn and two products will have rates increased by 0.02 per cent.




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