Mortgage lending has been strong at Santander lately, and this in turn has led to an increase of 13% with regard to their UK profits. The boost saw their profits increase to £532 million across the first three months of the year.
While Santander is not among the so-called Big Four high street banks, it has been in the midst of a concerted effort to take them on. Its efforts are clearly paying dividends, with a boost of £7.1 billion-worth of lending taking place during those same three months.
How much of this boost was down to changes to stamp duty rates?
While it is impossible to give accurate figures in this respect, the lender did say it expected lending to level off throughout the rest of the year. It believes many buy-to-let purchasers were rushing to complete their buys before the new stamp duty rules came into effect. This may have meant the first three months of 2016 saw more activity than would otherwise have been the case.
As such, Santander expects lending to be impacted throughout the next three quarters. March saw a “surge in completions”, according to Santander, and it spoke of the potential for “skewed figures” as a result.
Higher than expected figures, but this could be remedied later in the year
Santander admitted the figures for the first quarter were higher than it had anticipated. According to the figures released by the lender, however, only 4% of its total borrowers had buy-to-let mortgages. The vast majority was split between re-mortgagers and home movers. A third of the total was taken up by re-mortgagers, while the home movers were by far the biggest group, with 44% of the total mortgages taken out being put into this group. The remainder – 19% – were first-time buyers.
One wonders then whether the 4% that represents buy-to-let purchasers could have skewed the figures that much. According to all the data, this is indeed the case. However, it does make one wonder whether the figures for the next quarter will provide a sharp contrast to this quarter.
House prices to fall as well?
The lender also said house prices would slow down this year – perhaps not falling, but certainly slowing from their current levels. This too could have an effect on the amount of lending with regard to mortgages.
The main factor to help their boosted figures this quarter is certainly the presence of the buy-to-let market purchasing properties more cheaply while they still can. This is all set to change now, though, which should result in some interesting figures in the next quarter. There could well be a drop that will be accounted for by fewer buy-to-let mortgages being applied for and granted during that period. Only time will tell, but at least the year has got off to a good start for Santander. They seem to be well aware that it may not continue in the same way it has begun.