Residential lending was most strongly hit, falling from £1.4bn to £1.16bn, with buy-to-let business down slightly from £470m to £440m.
Internal product switches, which are not included in the new lending totals, were down from £1.43bn to £1.25bn.
And the mutual’s net interest margin was also cut to 1.09 per cent from 1.26 per cent in 2018 as the mortgage market competition continued at pace.
However, it explained it was investing significantly in new technology to improve the mortgage application process for brokers.
Overall, Principality reported that its net retail mortgage lending rose £499m helping to take total assets to over £10bn for the first time in the society’s history.
And it declared underlying profit for the year of £39.8m which it said was in line with expectations.
‘Simpler mortgage applications’
Principality Building Society interim CEO Mike Jones said he was proud of the mutual’s performance.
“Our aims are very much focused on securing the long-term future of the society and our underlying reported profits reflect the cost of the significant investment we are making in modernising the technology which supports our mortgage and savings businesses,” he said.
“This will make our mortgage application process simpler and more efficient for our customers and mortgage brokers to use.
“Our colleagues will also deliver a new savings platform which will improve our on-line service for members,” he added.