Author Ben Leonard

Santander has reduced the amount of mortgage lending and car purchase loans that they are prepared to give out after the Bank of England raised concerns about reckless lending and a “spiral of complacency” over the growing levels of consumer debt in the UK.

The high street bank’s mortgage lending fell from £12.6bn in the first half of 2016, to £11.6bn in the first half of 2017, a decrease of £1bn. Lending for buy-to-let schemes fell significantly during this period.

Consumer lending


Meanwhile, the total net lending, which includes how many people remortgaged away from Santander, fell over the half year by £200m.

The total amount of net consumer finance lending, which covers all types of lending to consumers including car loans and credit cards, dropped from £266m to just £97m. This was blamed in part due to “a decrease in the stock of new car registrations”.

Santander’s view

The Santander UK chief executive, Nathan Bostock, said:

“We do face uncertainty and that was my view at our last results. Generally, we have done less unsecured and credit card lending, and are probably down 10% on balances.”

According to Bostock, the increasing levels of competition is driving down interest rates to the lowest levels we’ve seen in recent history. He also noted that some competitors were providing better rates for car loans and credit cards to some customers, whilst not offering the same rates to much more secure mortgage customers.

Bostock did, however, add that the perceived risks of car loans need to be put in a wider context.

“Unsecured lending is a £60 to £70bn market, but the mortgage market is £1.3tn.”

Bostock then pledged that there would be no further cuts to Santander’s widely popular 123 account. This comes after the interest rates were cut by 50% in November 2016. Roughly 3.6m people in the UK have a 123 account, which was previously paying 3% on balances up to £20,000.

Loyal customer base

Despite recently cutting the interest payouts on their flagship product, the 123 account, Santander said that their “loyal retail customer base” had nevertheless increased to around 3.9m customers.


Their increase could be down to a strategy shift at the bank, which has seen them focus more on customer relationships. The bank has recently restructured to offer “an enhanced range of products, services and access to channels” which is based on the company values of being “simple, personal and fair.”

Santander’s average mortgage has remained steady over the first half of 2017. The average mortgage for London and the south-east equated to £263,000, whereas the rest of the country was £146,000. Santander’s UK average came out at £198,000.

On average, Santander said that their customers were taking out a loan that equalled 3.18 times their income, which increased from 3.16 in December 2016.

The total profits of the high street bank for the first half of 2017 were down 1%. Their profits for H1’17 stood at £1,063m, down from £1,078m last year. Roughly £69m of their profits were set aside to cover the ongoing PPI payouts.