The average new mortgage loan size was £228,00, down from £237,000 in 2022
The size of Santander UK’s mortgage book slumped amid a slowing housing market last year, with an £11.9 billion decline in lending in 2023, according to new results.
Santander said the average stock LTV rate on mortgages was 51% in the year to 31 December, up from 50% in 2022. The average new mortgage loan size was £228,00, down from £237,000 in 2022.
But, the UK arm of the Spanish-owned lender notched up a rise in annual profit thanks to higher interest rates.
The Spanish-owned bank said it was seeing a ‘modest’ rise in customer arrears across mortgages, credit cards, unsecured personal loans and overdrafts in recent quarters.
Santander UK thinks the Bank of England will cut base rate from its current level of 5.25% to 4.5% by the end of the year amid lower inflation, which the bank claims will ‘ease cost-of-living pressures for our customers’.
But Santander UK also expects declining interest rates to take a toll on the group’s profitability. Its net interest margin, a key performance measure for retail lenders, is set to drop this year.
The group reported a 13% increase in annual pre-tax profit to £2.1 billion for 2023, up from £1.9 billion the previous year.
It revealed a 36% drop in money set aside for loan losses, to £206 million, down from £321 million in 2022, amid an improved outlook for the wider UK economy.
Santander UK said the trend of balance movement from current to savings accounts slowed in the final quarter of 2023. Customer deposits fell from £196.5 billion in 2022 to £193.6 billion last year.
Santander UK’s boss, Mike Regnier said: During 2023 our focus has been on supporting our customers through the increased cost of living and higher interest rates.
He added: As we look ahead to 2024, we expect interest rates and inflation to drop.