- The lender saw a 2.2% year-on-year fall in mortgage lending to £57.1bn
- This was in for the three months to December
Virgin Money UK saw a downturn in mortgage market activity its first quarter as a likely peak in UK interest rates drives a housing market slowdown.
The London-listed lender saw a 2.2 per cent decline year-on-year in mortgage lending to £57.1billion in the three months to December.
However, the company said it had seen early signs that market activity had improved and were increasing back to 2019 levels, amid a fall in mortgage rates.
The London-listed lender saw a 2.2 per cent decline year-on-year in mortgage lending to £57.1billion in the three months to December
In a trading update, Virgin Money said: ‘There are early signs in January that market activity has improved, including market applications volumes more in line with 2019 levels within both residential lending and more recently buy-to-let.
‘Looking ahead, the group expects customer sentiment in mortgages to continue to improve, given the emergence of more positive trends at lower customer rates.’
The UK housing market has lost much of its momentum over the last year on the back of 14 consecutive Bank of England interest hikes before pausing in September.
Since then the BoE has opted to hold the base rate at 5.25 per cent. The decision was its fourth pause in a row, after the Monetary Policy Committee voted to hold the base rate first in September, and then in November and December.
The average five-year fixed mortgage rate hit a peak of 6.37 per cent in July, but has since lowered. Two years ago the average five year fixed mortgage rate was 2.75 per cent.
This has added thousands of pounds to the average homeowner’s annual mortgage costs, with millions refixing facing a shock. Some 7.5 million households are expected to have been affected by the rate rises.
Virgin Money UK boss David Duffy said he was ‘encouraged’ by ‘customers’ resilience and improving sentiment in the mortgage market as interest rates have peaked’.
Customer deposits grew by 1.7 per cent to £67.3billion, up from £66.1billion on the previous year.
The bank also revealed that business lending grew by 6.7 per cent in the same time period ‘driven by strong demand at good margins in our sector specialisms’.
The company stuck by its full-year net interest margin (NIM) forecast of 1.9 per cent to 1.95 per cent.
David Duffy, chief executive officer of Virgin Money UK, said: ‘We’ve delivered growth in new accounts, deposits and target lending segments, at stable margins and with ongoing cost efficiencies.
‘We carry good momentum into 2024 as we continue to successfully execute our strategy.’
Virgin Money UK shares were up 1.24 per cent to 151.55p in Tuesday morning trading
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