Homeowners flock to smaller banks as their lending volumes rise by 60%

Smaller banks are leading the charge when it comes to mortgage lending in the UK, with new figures showing their volumes grew by 60% last year.

The latest data on mortgage lending reveals that smaller banks and building societies are expanding their lending rapidly, with 60% growth in lending volumes in the past year.

Big names still sit at the top of the tables in terms of total amount lent, but their lending volume isn’t growing as it is with smaller firms.

Banking minnows such as Metro Bank, Aldermore Bank and Precise Mortgages rapidly increased the total amount they lent out via mortgages in 2016. These firms have started to “forge ahead” according to the Council of Mortgage Lenders.

Overall mortgage lending rose in 2016 up 11% on 2015 to a total £245 billion. That marked faster growth than the year before when mortgage lending rose by 9%.

There was also increased competition in mortgage lending with 60 banks and building societies lending more than £50 million in 2016 up from 55 in 2015.

The biggest lenders remain much the same within the top 10 though, in terms of gross lending, reading like a who’s who of your local high street (if all the branches haven’t been closed).

Top 10 Mortgage Lenders

Take a look at the Top 10 mortgage lenders

	Lender	*Lending (in billions)**	Market Share*
1.	Lloyds Banking Group	£38.3 (£38.4)	15.6% (17.3%)
2.	Nationwide Building Society	£35.3 (£30.5)	14.4% (13.8%)
3.	Royal Bank of Scotland	£31.6 (£24.7)	12.9% (11.1%)
4.	Santander UK	£25.5 (£26.1)	10.4% (11.8%)
5.	Barclays	£20.7 (£19.7)	8.4% (8.9%)
6.	HSBC Bank	£15.7 (£12.5)	6.4% (5.6%)
7.	Coventry Building Society	£9 (£8)	3.7% (3.6%)
8.	Virgin Money	£8.4 (£7.5)	3.4% (3.4%)
9.	Yorkshire Building Society	£7 (£6.6)	2.9% (3%)
10.	TSB Bank	£6.6 (£4.8)	2.7% (2.2%)

*2015 figures in brackets

It has hardly changed since 2015. The only new arrival is TSB which has moved up from 11^th position the previous year, swapping with Clydesdale Bank.

However, there are noticeable changes in market share. Lloyds Banking Group may still be the nation’s biggest mortgage lender but its market share has shrunk from 17.3% in 2015 to 15.6% in 2015. Santander UK also saw a reduction in its market share from 11.8% to 10.4%.

The challenger banks picked up share though: “Continuing a trend we have seen for the last two years, a number of challenger banks and specialist lenders made headway,” says the Council of Mortgage Lenders.

Amongst them are TSB whose overall mortgage lending rose by £1.8 billion, increasing its market share from 2.2% to 2.7%. The Council of Mortgage Lenders also noted significant lending growth for Precise Mortgages, Metro Bank, Fleet Mortgages and Legal & General Home Finance.

The Minnows

The Council of Mortgage Lenders highlighted that there had been strong growth amongst the lenders ranked 21-30 in the overall table.

	Lender	*Lending (in billions)**	Market Share*
21.	Bank of Ireland	£2.8 (£3.3)	1.1% (1.5%)
22.	Metro Bank	£2 (£1.2)	0.8% (0.5%)
23.	Precise Mortgages	£2 (£1.3)	0.8% (0.6%)
24.	Aldermore Bank	£1.6 (£1.2)	0.7% (0.5%)
25.	Principality Building Society	£1.5 (£1.2)	0.6% (0.5%)
26.	OneSavings Bank	£1.4 (£1.4)	0.6% (0.6%)
27.	Paragon Group	£0.9 (£1.5)	0.4% (0.7%)
28.	Nottingham Building Society	£0.8 (£0.6)	0.3% (0.3%)
29.	Northview Group	£0.7 (£0.5)	0.3% (0.2%)
30.	Tesco Bank	£0.7 (£0.7)	0.3% (0.3%)

*2015 figures in brackets

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