Abbey triples share of mortgage lending

Abbey has taken advantage of rivals' weakness to triple its share of mortgage lending and increase profits by 17 per cent in the first quarter.

The bank was bought in 2004 by Santander of Spain and UK rivals have often questioned what Santander was doing with the former building society. But in the first three months of the year Abbey increased its share of net mortgage lending to 15.9 per cent from 4.9 per cent a year earlier. Net profit rose to £235m from £201m as revenue rose 9 per cent and costs were held flat.

Mortgage lenders have been putting up prices and withdrawing products because of increased funding costs in the UK. But banks such as Abbey and Barclays now see the chance to make profitable loans in a less competitive market. Royal Bank of Scotland is trimming up to 0.3 percentage points off new mortgages to boost market share

Abbey said that harder funding conditions had a “negligible” effect on its earnings so far. It predicted that average house prices would be flat or slightly down this year.

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