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Lloyds Banking Group recorded its biggest-ever day of mortgage lending in March as UK homebuyers rushed to reap the benefits of a stamp obligation vacation earlier than the window closed.
The high-street financial institution on Thursday stated it lent to twenty,000 first-time consumers within the first three months of the 12 months, and bought a file 5,000 mortgages to consumers finishing on March 27. Lloyds’ whole mortgage e-book grew by £4.8bn to £317.1bn over the quarter.
The push got here days earlier than stamp obligation — a tax levied on property purchases — rose again to pre-2022 ranges on April 1. The modifications imply that first-time consumers will now pay the tax on properties price £300,000 or extra, fairly than £425,000 beforehand, with comparable modifications for non-first time consumers.
Lloyds’ chief monetary officer William Chalmers stated the enhance in mortgage lending was more likely to subside all through the remainder of the 12 months, as many purchasers had introduced ahead deliberate purchases.
“I’d be stunned if mortgage development is kind of as robust going into quarter two because it was in quarter one due to that deliver ahead impact,” he stated.
Homebuyers have additionally been helped by easing mortgage rates in latest weeks as lenders have minimize costs within the wake of US President Donald Trump’s tariffs. The common two-year mounted residential mortgage price was 5.18 per cent on Thursday, in line with information supplier Moneyfacts, down from 5.2 per cent on Wednesday.
“[Mortgage] charges have considerably come down over the course of latest weeks because the expectation of tariff-induced lowdown in financial projections [has] prompted individuals to suppose that perhaps charges might be decreased quicker than beforehand thought,” stated Chalmers.
His feedback got here as information launched by the Financial institution of England on Thursday confirmed that mortgage approvals fell for a 3rd consecutive month in March, as the frenzy to beat the stamp obligation deadline died down quickly.
Internet mortgage lending jumped from £3.3bn in February to £13bn in March. However mortgage approvals for home purchases — reflecting gross sales which were agreed however will nonetheless take about two months to finish — fell from 65,100 in February to 64,300 in March.
Lloyds’ first-quarter earnings fell 7 per cent 12 months on 12 months to £1.5bn — in step with expectations — because it put aside extra money than anticipated for dangerous loans in anticipation of the financial affect from US tariffs. Revenues rose 4 per cent 12 months on 12 months to £4.4bn.
The financial institution put aside £309mn for dangerous loans, greater than analysts’ expectations of £279mn, because it added a £35mn provision to account for modifications within the financial outlook linked to US tariffs.
Lloyds, seen as a bellwether for the UK financial system, indicated that total credit score high quality remained resilient, with “steady and benign credit score efficiency within the first quarter”.
Chalmers stated Lloyds’ direct publicity to UK companies that export to the US represented lower than 1 per cent of its whole mortgage e-book however that executives remained “vigilant for any potential second order affect” to the UK financial system.
The financial institution’s web curiosity margin — the distinction between the curiosity it fees on loans and the speed it pays on buyer deposits — rose to three.03 per cent, from 2.97 per cent within the earlier quarter. The enhance was pushed by so-called structural hedging, which the financial institution makes use of to clean the affect of falling charges on its margins.
Lloyds didn’t make any further provisions linked to potential liabilities from its motor finance enterprise, having beforehand put aside greater than £1bn to cowl the prices of a probe into the potential mis-selling of automotive loans.
The trade is awaiting a Supreme Court docket determination on whether or not it was lawful for banks to pay fee to automotive sellers if clients had not given knowledgeable consent for such an association.
Lloyds is coming into the ultimate phases of a £4bn funding plan to develop new income streams which can be much less intently tied to the rate of interest cycle. It has introduced 316 department closures and 500 job cuts to date this 12 months.
