Santander UK saw its mortgage lending come in at £13.1bn last year, a fall of £11.9bn over the last 12 months, due to higher funding costs and a slower housing market.
The UK arm of the Spanish-owned international bank says: “With a slower housing market and higher mortgage rates, applications fell in 2023.”
It adds: “Our decision to optimise the balance sheet given higher funding costs contributed to a reduction of £11.9bn in mortgage lending.”
This saw the high street lender’s mortgage book fall to £172.1bn at the end of December from 187.1bn a year ago.
The bank adds that it “expects another modest decline to house prices of 1%” this year.
It points out that across the home loan market, mortgage approvals last year “remained below 2022 levels”.
But it added that the housing market “showed some signs of recovery in the fourth quarter of 2023, as mortgage rates and inflationary pressures began easing”.
It says that it expects “inflation to fall further in 2024 which will help ease cost-of-living pressures for our customers”.
The high street bank reported a 13% rise in annual pre-tax profit to £2.1bn, driven by rising Bank of England base rates last year and “balance sheet management”.
Santander UK chief executive Mike Regnier says: “Despite the difficult backdrop, our prudent approach to risk and the hard work of everyone at Santander UK has delivered a strong set of results for 2023.
“As we look ahead to 2024, we expect interest rates and inflation to fall.”
