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Challenger and specialist lenders show strongest growth in 2015

Challenger banks and specialist lenders increased their gross lending by 56% in 2015, the equivalent of 2.9% growth in their collective market share, new data reveals.

By contrast, the established retail banks and building societies increased their gross lending by a modest 4% and 9% respectively, the Council of Mortgage Lenders (CML) revealed in its latest report, which shows lending by CML members in 2015, along with the size of their outstanding mortgage assets.

Gross lending overall in 2015 totalled £220 billion, up 8% on 2014. Growth at this level, while healthy, is lower than in the last couple of years. Nevertheless, the CML reports that “…competition in the marketplace continues to move strongly forward.”

The contraction in market share by the largest lenders, coupled with an increase in share by medium-sized firms is the continuation of a trend first seen in 2010.

However, so far the same five lenders hold the top spots and within this, the Royal Bank of Scotland increased its gross lending by 25%, edging up from fifth to fourth place.

Yorkshire Building Society fell two places, from 3.6% cent to 3% market share, while Virgin Money moved up a place, its market share rising from 2.9 to 3.4%.

But the biggest moves up the table came from the challenger banks and specialists, with 11 of the 16 lenders in this category moving up the table. These include Metro Bank, whose 200% growth in lending last year saw the steepest ascent, from 24th to 16th spot.

A summary of the findings concluded:

“… 2015 was a year where the mortgage market grew yet more competitive. Seen against a backdrop of a range of government policies looking to boost home-ownership, this increase in diversity and choice is clearly welcome.

“Many lenders’ interim results published so far point to continuing healthy growth, in line with industry data showing lending in the first half of 2016 at its highest level since 2008.

“Prospects for the mortgage market are, like any other sector of the UK economy, less certain than they were at the start of the summer. But our market has a robust and diverse base to support existing and aspiring home-owners and investors alike as we move forward.”


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