NatWest says gross new home loan lending fell by more than half in the first six months of the year to £11bn from £29.6bn in December, “reflecting mortgage margin pressure”.
The high street bank added that its mortgage balances fell by £2.5bn “as customer redemptions more than offset gross new lending,” leaving its retail banking mortgage book at £190.5bn at the end of June.
“Loans to customers were lower than the final quarter of 2023, mainly due to a reduction in mortgage balances where higher redemptions were only partly offset by new mortgage lending,” that bank said in a stock market statement.
The bank reported earnings results showing pre-tax profits dropped 16% to £3bn for the six months to June 30. Despite the fall, the result was better than the £2.6bn most analysts had expected.
Major lenders have seen profits cut back this year from sizeable returns seen over the past two years, as the base rate has stabilised and competition in the mortgage and savings market increases.
However, the lender now expects full-year income to come to £14bn, up from previous forecasts of between £13bn and £13.5bn.
NatWest has agreed to buy a £2.5bn portfolio of prime UK residential mortgages from Metro Bank for up to £2.4bn in cash.
NatWest also revealed it spent £24m on shelved Tory government plans for a retail share sale in the bank.
