Santander’s mortgages fall.

by Mark Johnston

                                     Santander’s mortgages fall.

Santander it seems has been scaling back on lending and had said it expected to reduce its mortgage stock.

The UK arm of the business, revealed a sharp fall in the three months to September 30 as funding and regulatory costs impacted on their margins.

The bank, which is currently the second-largest mortgage provider in the UK, has recently revealed a dramatic drop in lending to home buyers in the third quarter as it tried to raise the quality of its loan book.

Figures from the Council of Mortgage Lenders (CML) show that mortgage lending jumped by 8per cent in July, after a sharp fall in June, and was up by 2 per cent on the same time last year.

The British Bankers Association (BBA) also said that mortgage lending rose in July, this time by 10 per cent.

However, Santanders mortgage book shrank from £172.6 billion at the end of September 2011 to £167.4 billion at the end of September this year.

Current figures reveal that Santander did just £2.8 billion of gross mortgage lending between July and September. This is well below the last two years’ levels, when gross mortgage lending was £23.7 billion in 2011 and £24.2 billion in 2010.

 According to the bank’s third quarter management statement, the lender’s share of the UK mortgage market dropped from 16.3 per cent in 2011 to 10.8 per cent this year.

The bank recently announced that it would raise its standard variable rate (SVR) and many experts accused the bank of profiteering, causing particular hardship for those people without sufficient equity in their house to be able to remortgage.

It has commented however that  around 22 per cent of its 2012 lending has gone to first-time buyers. Roughly 75 per cent of the lender’s mortgage lending comes from intermediaries.

Even in light of these recent figures the bank does however still believe that it remains on track to become not just a major retail bank in the UK but also a significant lender to small businesses.

So far, £1 billion of funding has been accessed bySantanderunder the government’s Funding for Lending Scheme (FLS), which it said would be used to maintain its lending commitments to UK businesses.

Santander, who own the former Abbey and Alliance & Leicester building societies, have decided to move away from more risky business such as higher loan-to-value and interest-only home loans and have instead focused on lending to small businesses, which rose 20 per cent to £10.2billion in the first nine months. They also want to concentrate on attracting customer deposits and current accounts.

Capital Fortune managing director Rob Killeen says: “It is disappointing when a lender as important as Santander pulls back from the market to such an extent. Hopefully it will make the decision to come back in a big way as it will be a real help to the market.”

However, Santander has cut its mortgage rates and is offering cashback on repayments to customers with a 123 current account.

Andrew Montlake, of mortgage broker Coreco, said “Santander now offers some of the cheapest fixed rate deals over five, three and two years”.






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