Santander UK gross mortgage lending drops 21%

Santander UK has reported a 21% drop in gross mortgage lending for the first six months of 2011 compared to the same period in 2010.

In its half-year results, the lender revealed gross mortgage lending was £9.7bn in H1 2011, compared to £12.3bn in H1 2010.

Santander said this gave the group an estimated market share of 15.4%, down from 19.1% and 16.7% in the first and second halves of 2010 respectively.

The average LTV on its new mortgage business was down 2% to 64% in H1.

Overall, Santander's net mortgage lending was £0.4bn negative for the first six months of the year, with negative lending of £0.6bn in Q1 and positive net lending of £0.2bn in Q2. This was down 110% on the first half of last year.

Santander said the falls reflected the weaker pipeline from the last quarter of 2010, during which market pricing became less attractive in the lower LTV segments of the market.

However, it said it expects positive net lending in the second half of this year.

Santander UK’s profit before tax was £1.15bn in H1, down 3% on the same period last year, impacted by higher liquidity and regulatory costs. Its post-tax profit was £839m.

In addition, the results included Santander's decision to make a one-off provision of £538m to cover the cost of expected payment protection insurance (PPI) claims.

Although Santander UK did not participate in the UK court case on PPI, it said it has consistently settled claims over the last two years. Following the result of the court case, it saw a rise in the volume of claims received, which led to its decision to make the provision.