The value of Santander’s UK mortgage book declined to £178.7bn during the first half of 2023, down from £187.1bn in the six months to December.
It said the slower housing market and higher mortgage rates resulted in a drop in applications. The bank also made the decision to “optimise the balance sheet” because of higher funding costs, which it said led to its mortgage lending fall by £8.4bn.
Santander did not disclose its net or gross mortgage lending figure for the period.
The bank said it took a prudent approach to lending during the period. The average loan to value (LTV) of its mortgage stock rose slightly from 50 per cent to 51 per cent, while the average loan size fell from £237,000 to £225,000.
Some 0.68 per cent of its mortgage portfolio was over three months in arrears, up from 0.62 per cent in the six-month period ending December 2022.
Santander said there was no sign of “material deterioration in credit quality” within its loan book and cut its credit impairment charges down by £13m to £105m.
It said mortgage margins “remained tight” despite a rise in rates in Q2.
‘A sensible approach to managing our mortgage book’
Looking ahead, the bank said the challenges faced by households and businesses would remain with inflation cutting into real consumer spending and house prices continuing to fall.
Mike Regnier, chief executive of Santander, said: “We maintained our focus on supporting our customers during the first half of the year, working to provide products and services to meet their needs in the current climate. We know that the ongoing volatility in the mortgage market and continuing inflationary pressures are creating challenges, and we encourage anyone facing difficulties to get in touch as soon as possible.
“While the wider economy has continued to be unsettled, we have maintained our prudent approach to risk, while taking a sensible approach to managing our mortgage book.”
He added: “These results reflect our prudent approach in an economically uncertain environment which is set to remain for the rest of 2023, impacting consumer spending and the housing market. However, the UK labour market remains strong and our customers have continued to show resilience. We will continue to prioritise providing them with the best support we can.”
Profit on the rise
Santander posted a profit before tax of £1.17bn up from £993m during the same period last year.
Its net interest margin increased by 18 basis points to 2.21 per cent which it attributed to the base rate increases. Its net interest income rose 10 per cent to £2.3bn.
Shekina is the commercial editor at Mortgage Solutions. She has over four years’ experience in the B2B publishing market, with previous industries including the accounting, pet, funeral, hospitality, retail and jewellery trades.
She currently reports on current events in the mortgage market and liaises with financial clients to produce sponsored content.
Follow her on Twitter at @ShekinaMS
