Gross mortgage lending at Santander, which is the third largest lender in the UK according to UK Finance, varied during the last year, coming to £8.2bn in Q1 last year, £9bn in Q2, falling to £8bn in Q3 and then rising slightly to £8.4bn in Q4.
According to its latest results, the lender’s mortgage loan book came to £180.9bn, which is up from £177.3bn in the previous quarter.
Profit from continuing operations before tax more than doubled quarter-to-quarter from £175m in Q1 2021 to around £495m in Q1 2022.
The lender said that it had made a charge of £18m in Q1, which was due to an uplift in its modelling of likelihood of mortgage default.
“We uplifted our modelled mortgage probability of default as back testing and monitoring shows a risk of model underestimation,” it said.
The largest group of mortgage borrowers was homemovers at 42 per cent, followed by remortgagors at 29 per cent and first-time buyers at 20 per cent.
Buy-to-let made up nine per cent of borrowers, and its buy-to-let balance was £15.7bn, which is slightly up from the previous quarter’s £14.9bn.
Around 46 per cent of its loans were between 50 and 75 per cent loan to value (LTV), and 45 per cent were up to 50 per cent LTV.
The average LTV of its mortgage portfolio is 40 per cent as of March this year, which is in line with 41 per cent LTV at the end of last year. The average LTV of its new business was 64 per cent LTV.
Over half, 59 per cent, of its mortgage loans were up to £250,000, with 30 per cent of loans between £250,000 and £500,000. The average loan size was £177,000 for stock and £237,000 for new business.
South West and London key areas and majority are fixed rates
Under a third, 31 per cent was in South West excluding London, whilst over a quarter, 26 per cent, of its mortgage lending was in London.
This was followed by the Midlands and East Anglia at 14 per cent and the North at 13 per cent of mortgage lending.
Most of its portfolio, 86 per cent, is on a fixed rate, with nine per cent on a variable rate. Only four per cent is on a Standard Variable Rate.
It added that it expected its growth in mortgage lending to be “broadly in line with the market”.
Santander said that increased cost of living would impact its customers and affect affordability of unsecured lending.
It said that to date it “had not seen any deterioration of credit quality”, adding that its unsecured lending and buy-to-let portfolios were “relatively small”.
Santander continued that inflation would continue to impact operating expenses in the coming year, but this could be offset by savings from its transformation programme.
Mike Regnier (pictured), incoming chief executive officer of Santander, said: “I’m proud to be presenting my first set of results, as the new CEO of Santander UK, and feel privileged to have the opportunity to build on the fantastic work of Nathan Bostock, our former CEO, and the team.”
He said that the first quarter had “continued the momentum we built during 2021”, pointing to the growth in profit from continuing operations before tax.
Regnier added that his had been “underpinned by another strong performance in the mortgage market” with £3.6bn of net lending.
“Our transformation programme continues to focus on digitalisation and meeting the changing needs of our customers. This is backed up by our resilient balance sheet and prudent approach to risk,” he said.
Regnier said that households faced rapidly increasing costs of living and it was “ready to support our customers and provide them with practical advice and tools”,
“We have a dedicated team of financial care specialists, reaching out to people who may be experiencing difficulties and have increased online customer support capability. We will explore all options for customers who are facing difficulties with their loan, credit card, overdraft or mortgage.”
