According to its latest results, the majority of this was owner-occupied at around £36.3bn, followed by buy-to-let at £4.9bn. Interest-only mortgages on a variable rate accounted for £24m and interest-only fixed rate was around £5.3bn.
The bank said its mortgage book growth was due to “strong housing demand and remortgage activity and increased buy-to-let lending”.
Natwest made an operating profit before tax of £5.1bn, which is up from £3.8bn in 2021. Of that £3.3bn is attributable profit, which is an increase of from £3bn in 2021.
It added that it had a growing stock share in mortgages, going from 10.8 per cent in 2019 to 12.3 per cent in 2022. The lender’s total mortgage balances came to £187.2bn.
The report added that 232,000 customers had moved to a new deal in 2022, while its system allowed 19,500 new customers to apply for a mortgage online, a rise of 47 per cent from 2021.
Natwest said its customer rates had fallen from its October peak, noting that around 66 per cent of its balances were five-year fixed rates, 25 per cent were two-year fixed rates, four per cent were trackers and four per cent were on standard variable rates (SVR).
Around £41bn or 22 per cent of its fixed rates will expire by the end of this year.
Natwest added that 17 per cent of its mortgages were interest-only, including buy-to-let which represents 10 per cent of all mortgages.
The average loan to value for its mortgages was 53 per cent.
Arrears and forbearance remains low
The lender continued that there were low levels of arrears and lower forbearance flows than in 2021.
The results showed that forbearance flow for mortgages in 2022 was 193 and forbearance stock was 1,039, up from 280 and 2,111 in 2021 respectively.
On the arrears side, Natwest said there were 649 mortgages currently in arrears, with 133 in one to three months of arrears and 233 in arrears of three months or more.
The lender added that overall it had a net impairment charge of £337bn for 2022, of which £74m was a release related to mortgages.
“Underlying book performance remains strong, with credit conditions remaining benign and levels of default remaining low,” it added.
The lender reiterated that its impairment guidance of 20 to 30 basis points in 2023 was still in place.
For 2023, Natwest expects a total income of £14.8bn, and aims to reduce operating costs by around £7.6bn.
It also predicted a return on tangible equity of 14 to 16 per cent.
Nearly £3bn in green mortgages completed since launch
Natwest has completed £2.9bn of green mortgages since they were launched at the end of 2020, with £826m completed in the last quarter of 2022.
The lender said it aimed to make £10bn in lending available for residential properties with an Energy Performance Certificate (EPC) rating with an A or B rating from the start of this year to the end of December 2025.
It also aims to get half of its mortgage portfolio to an EPC rating of C or above by 2030.
As of the end of last year, around 41.5 per cent of its UK residential mortgages portfolio was EPC C or higher. This is up from 38.3 per cent the year before, and is based on mortgages that has EPC data available.
Natwest’s chief executive, Alison Rose (pictured), said the group delivered a “strong performance” in 2022.
She added: “We made considerable progress against our strategic goals, maintained a well-balanced loan book and distributed significant capital to our shareholders, including the UK government.
“Despite not yet seeing significant signs of financial distress among our customers, we are acutely aware that many people and businesses are struggling right now and that many more are worried about what the future holds.”
She continued: “Our robust balance sheet, responsible lending and continued capital generation allow us to proactively support those who need it, whilst helping others to get ahead of the challenges to come.”
Rose said that as well as supporting customers its financial strength allowed it to continue to invest in the business to “meet the changing needs of our customers”.
“By building long term relevance, trust and value through our purpose-led strategy, we will deliver sustainable returns and, ultimately, help to drive economic growth across the UK,” she added.
According to the report, Rose received an annual pay of £5.2m, of which £643,000 was an annual bonus and £2.2m was long-term incentive award.
