Its financial update showed that this brought its mortgage book down to £177bn for the period and so far this year, it has completed £32.4bn in new business and internal product transfer lending.
Santander UK did not give a breakdown of its new mortgage and internal switches lending, but during the same period last year it completed £28.2bn in new business lending and £17bn in product switches. This amounted to £45.2bn.
The lender said this year’s housing market was “slower” and higher mortgage rates had resulted in a drop in applications.
While it said new business mortgages rates had started to ease, the margins were still tight in Q3.
Borrower profiles
Santander said the average loan to value (LTV) of its existing mortgage stock was 51 per cent, while the new business LTV averaged at 65 per cent.
The average new loan size was lower than last year at £227,000 against £237,000.
Buy-to-let lending made up a “small portion” of its mortgage book with a nine per cent share, which was the same as last year. Home movers accounted for 42 per cent of business while remortgagors made up 28 per cent. First-time buyers made up 21 per cent of its mortgage borrower base.
Santander UK said 0.74 per cent of its mortgage book was in arrears of more than 90 days, up from 0.62 per cent at the end of 2022. It said this was still below the pre-pandemic average of 1.31 per cent.
Year-to-date performance
Santander UK posted a profit before tax of £1.73bn, a 16 per cent growth on the previous year’s figure of £1.48bn.
Its net interest margin improved from 2.04 per cent to 2.23 per cent, which it owed to base rate increases and the management of its balance sheet.
The bank’s net interest income went up eight per cent from £3.2bn to £3.5bn, which it also said was largely due to the impact of higher base rates with disciplined deposit pricing, partially offset by a reduction in lending margins.
Santander UK reduced its credit impairment charges by 20 per cent to £204m, reflecting “better macroeconomic scenarios”.
Mike Regnier, chief executive of Santander UK, said the bank delivered a “good set of results” despite the challenging environment.
He added: “Our clear strategy and prudent approach to risk – alongside the positive benefits of Banco Santander’s new operating model – will enable us to continue to support customers through the economic challenges ahead.”
