The figure is a steeper fall than the overall UK mortgage market which dropped by 10 per cent from £267bn to £241bn as the pandemic hit last year, according to the Bank of England.
Coventry Building Society also increased its provision for potential future losses on its mortgage loans by £36m, although it said the book was continuing to perform well.
“This year, our approach to lending was more cautious in light of the pandemic, market disruption and the significant uncertainty we faced,” the mutual said in its annual results.
Buy-to-let lending increased as owner-occupier mortgages accounted for 60 per cent of total new lending, down from 67 per cent in 2019, at an average loan to value (LTV) of 65.5 per cent.
And total mortgage assets at the end of 2020 rose by £1.2bn comprising £25.7bn of owner-occupier loans and £17.7bn in buy-to-let loans.
Just 0.09 per cent of mortgage balances were 2.5 per cent or more in arrears, on par with 2019 and below the latest available industry average of 0.69 per cent.
During the year more than 39,000 borrowers were supported with payment holidays which helped keep possessions and forbearance low.
There were 22 cases in possession at the year end from 33 in 2019, while forbearance levels were down by 17.1 per cent year-on-year in value terms and 21.3 per cent in number of cases.
The lender’s CET 1 capital ratio increased slightly to 33 per cent which it expects to continue to be among the highest reported in the UK.
‘Carefully managed’ mortgage activity
Overall, the lender maintained its profitability, recording a profit before tax of £124m which was down slightly from £147m in 2019.
It said its net interest margin recovered in the second half of the year following the Bank of England Base Rate reduction in March, but decreased by 0.02 per cent to 0.81 per cent.
It added that no employee was furloughed and 75 per cent of office-based staff have worked from home since the first lockdown on 23 March 2020.
Coventry Building Society chief executive Steve Hughes said he was pleased with the mutual’s performance during the pandemic, including growing its mortgage book.
“Through the pandemic we continued to grow both mortgages and savings, delivered outstanding service and value to our members and provided strong support for colleagues and the local communities,” he said.
“Despite the market effectively closing down during the first lockdown, mortgage growth was £1.2bn to £43.5bn, as we carefully managed participation through the year.
“In the early weeks of the pandemic, we arranged over 39,000 mortgage payment holidays for borrowers, with the vast majority now resuming payments. Although our mortgage book continues to perform well, we increased provisions by £36m to protect against potential future credit losses.
“Our strong relationship with intermediaries, and our ability to support them with a consistently good service, helped underpin our growth in 2020 and we remain cautiously optimistic that, with the right support, the housing market will remain strong in 2021.”
