Finance News

Smaller UK mortgage lenders seeing strong growth

Em Morley - June 21, 2017

The most recent report released by CML shows that small and medium sized mortgage lenders are seeing strong growth. This comes despite the 10 biggest lenders continuing to take up the most business in the market.

In 2015, medium-sized lenders saw strong growth, with a 56% increase in annual lending volumes. In 2016 however, there was a more steady rate of growth experienced by these lenders.

Instead, those classified in the next tier down – between 21-30 by volume of lending – saw improved growth.

Lending Rises

These firms saw volumes increase by 60% in aggregate and include names such as Paragon, Nottingham BS, Tesco Bank and Fleet Mortgages.

The proportion of new lending by the top ten firms remained steady at 84% during 2016. However, there were some considerable movements.

For example, Lloyds Banking Group remained the largest mortgage lender in the UK, but saw a fall in its market share, from 17.3% in 2015 to 15.6% last year.

Santander UK also saw a fall in its market share, from 11.8% to 10.4%. The Royal Bank of Scotland however saw its share rise from 1.8% to 12.9% – a rise to sit at third place in the lending list.

Smaller UK mortgage lenders seeing strong growth

Smaller UK mortgage lenders seeing strong growth

Challenger Headway

One particular trend that has continued for the last couple of years was the rise in challenger banks and specialist lenders making headway in the list. TSB Bank saw the most significant growth, with its market share rising by 0.5%.

Activity for this particular group was significantly up, with Precise Mortgages, Metro Bank, and Fleet Mortgages seeing rises of 54%, 67% and 150% respectively.

Gross overall lending in 2016 amounted to £245bn, up 11% on 2015. This was a slightly higher rate of market growth than the 9% seen in the year before. In addition, there was a corresponding increase in marketplace competition. 60 lenders appeared in the CML table for lending in 2016 – made up of those who lent over £50m- up from 55 in the preceding year.