According to OSB Group’s results for the first half of the year, market activity in the period was “subdued and competition in our core sub-segments increased”, especially in the second quarter.

“We retained our disciplined approach to pricing new business, prioritising returns. We chose not to follow as some lenders reduced their new business spreads in certain sub-segments. We continued to lend to professional, multi-property landlords at good margins,” the firm explained.

OSB Group noted that its underlying net loan book grew by 1.5% to £26.1bn in the period, up from £25.7bn in the same period in 2023.

The firm said that the proportion of customers in three months or more of arrears was 1.9%, which is slightly up from 1.6% last year.

OSB Group’s underlying profit before tax rose to £249.9m in the first half of the year, up from £116.6m in the same period last year.

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The firm said that its underlying net interest margin (NIM) increased to 243 basis points, a rise from 203 basis points in the first half of 2023.

OSB Group said that it had provided “secured funding lines to non-bank lenders [that] operate in certain high-yielding, specialist sub-segments”, mainly secured against “property-related mortgages”.

Total credit approved limits as at 30 June 2024 were £48.8m, with total loans outstanding of £23.6m, a change from £197.1m and £34.1m at the end of last year.

The firm said that, during the period, it “maintained a cautious risk approach, focusing on servicing existing customers”.

 

BTL and SME net loan book rises to £12.5bn

OSB Group said that its buy-to-let (BTL) and SME net loan book had grown by 3% to £12.5bn in the first six months of the year, backed by originations of £996.8m. The originations figure is down by 8% compared to the prior period.

The firm said that its BTL gross loan book grew by 4% to £11.2bn at the end of June 2024 compared to the end of 2023.

BTL originations stood at £762.9m, which is a fall of 3% from £786.9m in the prior period, and it was “focused on retaining professional, multi-property landlords”.

OSB Group said that “refinance activity was strong”, as Kent Reliance’s BTL completions from refinance increased from 59% last year to 63%.

Additionally, 74% of existing borrowers selected a new product, under the Choices retention programme, within three months of their initial rate ending, which is in line with the same period last year.

The firm said that five-year fixed rates made up 71% of BTL completions, a slight fall from 76% last year, and more borrowers were selecting shorter-term fixed rates. The lender said that this was due to the “expectation of future interest rate reductions”.

Professional, multi-property landlords represented 92% of completions by value for the Kent Reliance brand, stable on last year, and 91% of mortgage purchase applications came from landlords borrowing via a limited company. The latter is up from 86% last year.

OSB Group said that first charge originations under the Kent Reliance brand reduced by 26% to £133.7m in the first six months of 2024, which it attributed to specialist mortgage demand being “subdued” due to high interest rates and the expectation of future interest rate cuts.

Kent Reliance’s gross loan book increased by 3% to £2,271.1m compared to the prior period.

InterBay’s gross loan book comes to £1.2bn

Through its InterBay brand, OSB Group said that the gross loan book rose by 6% to £1.2bn as of 30 June 2024, up from around £1.1bn at the end of last year.

The firm said that this growth was “supported by originations and the proactive retention programme introduced towards the end of 2023”.

InterBay’s originations decreased to £137m from £193.7m in the prior period due to “transferring origination of more complex buy-to-let new business” from the InterBay Commercial brand to the Kent Reliance BTL brand “to match the reporting of gross loans”.

The residential development finance gross loan book, through its Heritable residential development business, was pegged at £222.2m at the end of June 2024, with an additional £128m committed. This compares to a gross loan book of £280.8m at the end of December and £120.9m committed.

Total approved limits were £519m, a decrease from £566.8m at the end of last year. OSB Group said that this was “exceeding drawn and committed funds due to the revolving nature of the facility where construction is phased and facilities are redrawn as sales on the initially developed properties occur”.

 

CCFS’ net loan book stands at £11.3bn

Charter Court Financial Services’ (CCFS’) underlying net loan book fell by 1% to £11.3bn in the first half of the year, with originations declining by over a quarter to £782.7m compared to the same period last year.

The firm’s BTL originations through the Precise brand decreased by more than a third to £339.3m, due to the group choosing “not to offer mortgages at lower returns”. The BTL loan book stayed stable at £7.9bn.

Remortgages decreased to 48% of completions under the Precise brand from 53% last year, which the company said showed the “relative strength of purchase activity”.

The group was offering retention products to 56% of existing customers within three months of their initial rate coming to an end, slightly down from 59% in the same period last year.

Around 60% of completions were five-year fixed rates, a decline from 66% last year, and borrowing through a limited company accounted for 68% of completions, an increase from 65%.

Specialist property types, like houses of multiple occupation (HMOs) and multi-unit properties, jumped from 18% of completions last year to 27%.

In CCFS’ residential sub-segment, the gross loan book stood at nearly £3bn, roughly in line with last year.

Origination in this sub-segment was £251.5m, down by 21% last year.

Short-term bridging loans decreased to £191.9m, compared with £226.7 in the first half of 2023, meaning its gross loan book fell by 3% year-on-year to £324.7m.

The second charge loan book decreased to £72m compared with £83m at the end of last year, as the group no longer offers second charges under the Precise brand and the book is in run-off.

OSB Group’s results show ‘disciplined approach to new lending’

Andy Golding (pictured), OSB Group’s CEO, said that he was “pleased” with its performance in the first half of the year, showing its “disciplined approach to new lending, as we focused on maintaining our return on equity against a backdrop of subdued mortgage market volumes”.

He said that, based on current market activity and its “disciplined approach to lending and retention”, the group expects to deliver underlying net loan book growth of circa 3% for 2024.

“We have seen an improvement in the macroeconomic outlook recently, which supports our cautious re-entry into more cyclical, higher-margin sub-segments, which will contribute to returns in the medium term. We are now past peak interest rates, which will also provide a much-needed stimulus to the mortgage market.

“The group is well-capitalised and well-positioned to successfully leverage our unique multi-brand structure and benefit from the opportunities as they arise. I remain confident in the outlook for the group and our ability to deliver sustainable and attractive returns for our shareholders,” Golding said.