According to its latest results, OSB Group said the “planned reduction” in originations was the “result of our disciplined approach to pricing new business and prioritising returns”.
“We chose not to follow as some lenders reduced their new business spreads in certain sub-segments, which led to an improved and attractive blended front book margin for the year,” it said.
The company said it had diversified its originations into its “well-established, higher-yielding commercial and residential development finance sub-segments”, up by 10% in the year to £446.8m and £189.1m respectively, while bridging originations were up by 5%.
“We continued to provide finance to professional, multi-property landlords investing and extending their portfolios despite the subdued market activity,” it said.
Speaking to Specialist Lending Solutions, Jon Hall (pictured), OSB Group’s mortgage and savings group managing director, said it had the “ambition to be the number one specialist lender” and that its approach was to make “all of its lending products really easily accessible to the UK mortgage market”.
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He added that 99% of its portfolio was intermediated and it was a “one-stop shop for intermediaries” and had been “very focused on the combination of new lending and product transfers”.
Hall said OSB Group had done close to about 32,000 loans in 2024 for new and product transfer customers.
“Pricing in our mortgage lending market… reflect[s] the premium service and the specialist service we give, so we’ve been more focused on making sure that the return for service is appropriate, rather than growth for the sake of growth,” he explained.
OSB Group said its underlying net loan book had fallen slightly by 2% to £25.1bn, which is due to the “de-recognition from the balance sheet of £1.25bn of Precise buy-to-let mortgages”, following the completion of its securitisation in December.
The firm said the underlying net loan book would have grown by 2.5% since 31 December 2024, barring this transaction.
The company’s underlying profit before tax has grown by 4% to £442.9m.
The firm said balances with over three months’ arrears were at 1.7% of the loan book, which is slightly up from 1.4% in the prior year.
OSB Group said the rise in arrears was “largely due to the impact of borrowers, with maturing fixed rate mortgages facing significantly higher prevailing rates”.
The firm continued: “We continued to work closely with those needing assistance. As anticipated, the group’s arrears stabilised in the fourth quarter of the year as affordability for remortgaging customers improved.”
Refinancing across OSB Group brands ‘robust’
Looking at refinancing, the firm said it was “robust” this year, with 62% of buy-to-let (BTL) completions in Kent Reliance represented by remortgages, unchanged from 2023.
For Precise, refinancing fell to 46% of completions from 48% in the prior year, reflecting OSB Group’s “disciplined approach to mortgage pricing”.
Under Kent Reliance’s well-established product transfer programme, 70% of borrowers refinanced with the group within three months of their fixed rate product ending. This is a slight fall from 78% in the prior year.
The proportion of Precise borrowers who chose another product with the group reduced to 51% from 66% in 2023, as the group continued to be “selective in offering retention products”.
Diving into sub-segments
Looking at OSB Group’s BTL and SME sub-segment, the net loan book increased by 8% to around £13bn, supported by strong originations of around £2.2bn, which is up 2% on the prior year.
The firm said the growth was due to focusing on “new lending in more specialist and higher-yielding sub-segments”.
On the BTL side, its gross loan book increased by 6% to £11.2bn at the end of the year, with the firm adding that it benefitted from a rise in new purchase activity.
Originations in this segment decreased by around 5% year-on-year to £1.4bn.
Within its commercial business, which is done via the InterBay brand, the gross loan book grew by 24% to around £1.4bn, supported by originations of £446.8m, which increased 10% from £405.6m in the prior year.
OSB Group said it had “focused on high-quality commercial and semi-commercial business in the year” and added a “simplified semi-commercial product range” in January.
On the residential development side, the residential development finance gross loan book was £262m at the end of 2024, with an additional £168.2m committed.
OSB Group said total approved limits are £623.3m, which is up from £566.8m in 2023. The company said this exceeded drawn and committed funds due to the “revolving nature of the facilities, where construction is phased and loans are redrawn as sales on the initially developed properties occur”.
The report noted that first charge originations under the Kent Reliance brand fell to £255.9m in the year, which compares to £342.2m.
OSB Group said that group had chosen “not to offer mortgages at lower returns due to heightened competition in the year”.
The gross loan book was £2.18bn as at 31 December 2024, broadly flat compared with the prior year.
CCFS results
Looking at Charter Court Financial Services (CCFS), originations in the BTL sub-segment through the Precise brand decreased in 2024 to £516.7m, which compares to around £1bn in the prior year.
OSB Group reiterated that it “chose not to offer mortgages at lower returns due to heightened competition”.
The underlying gross BTL loan book decreased by 20% in the year to £6.4bn, from £7.9bn at the end of 2023, largely as a result of the December securitisation and deconsolidation transaction.
The gross loan book in CCFS’ Residential sub-segment remained broadly flat at £3bn and originations reduced to £514.6m in 2024, from £743.6m.
“The group continued to focus on individuals under-served by high street lenders and broadened its offering in May with the addition of one-year fixed rate and lifetime tracker products,” it said.
Short-term bridging originations grew by 5% to £460.1m as the group focused on building a “pipeline of high-quality, high-return business”.
The gross loan book in this sub-segment grew by 9% to £364.5m.
Funding primarily from retail deposits but securitisations also key
OSB Group said retail deposits were the primary source of funding and grew by 8% year-on-year to £23.8bn.
“The growth was due to our consistently fair and attractively priced products, as well as the continued repayment of the TFSME drawings, which were largely replaced with retail funding,” it said.
The company said it had opened more than 237,000 new savings accounts in the year and retention was strong.
OSB Group also completed a £509m securitisation of BTL mortgages in February, a £330m securitisation of owner-occupied mortgages in May and a £1.25bn securitisation of BTL mortgages in December.
The company said “all securitisations saw strong demand from our growing investor base, which allowed us to achieve attractive pricing”.
Transformation programme underway
OBS Group said it had completed two years of its five-year transformation programme, with a close-to-£60m spend to date.
The company said it expected to spend around £130m until the programme completes in 2027.
Speaking to Specialist Lending Solutions, Adrian Moloney, group intermediary director at OSB Group, said that since the launch of its Precise app last year, it has garnered over 500 regular users and issued around 2,500 case updates to users, which is a “real positive”, and noted that there was “more to come on that”.
He continued: “We’re looking at improving, with broker interaction and feedback… the broker journeys on our lending lines. We’ll launch an improved platform this year; it reduces the keying of agreements in principle (AIPs) by 50%, so reducing the amount of information that brokers have to put in there.
“It mixes the best of… what we’re famous for, manual underwriting, but using tech and data to automate some decisions that we haven’t been able to do… in the past.”
Moloney added that it would also be reducing the amount of time to register with its multiple brands, and brokers would be able to register for all brands in “one hit”.
“It will mean that we’re more agile to market in terms of products and proposition[s] that we like to do as a specialist lender, and most importantly, it’s going to improve the journey,” he said.
Low-single-digit net loan book expected for 2025
Looking ahead, the company said it expected low-single-digit net loan book growth for 2025 and that this would be “modestly higher” in 2026.
Net interest margin was estimated at around 225 basis points, and this was expected to be similar in 2026.
The firm said it expected new lending market growth across all lending segments to be between 3% and 9% from 2025 to 2029, and the group’s segments will deliver an estimated annual lending flow of £155bn.
In the annual report, Andy Golding, OSB Group’s CEO, said the group’s “focus on writing a blend of new business in segments where returns are strong and sustainable was reflected in the quality and mix of originations written during 2024”.
He continued: “In line with our optimised lending growth plan and medium-term aspirations, we have increased new lending in diversified specialist segments where we have deep credit expertise whilst maintaining our leading position in the professional buy-to-let segment.
“These segments, which deliver strong risk-adjusted returns, include commercial lending, asset finance, development finance and bridging. This will have a positive impact on the group’s overall risk-adjusted returns as the back book matures and is replaced with an optimised mix of new business.”
Golding said the group had “continued to leverage the strengths in intermediary relationships and breadth of individual customer needs that position the group as the UK’s number one specialist lender”.
“Our transformation programme will position us to scale in all our lending segments and grow efficiently in the medium term. It will also allow us to further enhance the experience of dealing with OSB Group for our lending and savings customers and intermediary partners in 2025 and beyond,” he noted.
