Mortgage lending slows for Virgin Money UK

HIGH street bank Virgin Money UK has revealed a dip in total mortgage lending amid a slowdown in the housing market, as it steams ahead with plans to trim its branch network across the country.

The lender said it had been a “positive start to the year” in unveiling first-quarter financial results in line with its expectations.

It showed a 2.2% decline in mortgage lending to £57.1 billion in the three months to December, from £58.4 billion in the same period a year earlier.

This fall reflected a disciplined approach to lending in a “subdued” market, it said.

But it pointed to early signs that activity in the housing market improved in January, with residential and buy-to-let mortgage applications being more in line with 2019 levels before the pandemic.

Lower mortgage rates are expected to give consumer sentiment a boost, as interest rates have now “peaked”, the bank predicted.

Nevertheless, provisions for bad loans grew to nearly £640 million from £617 million in the previous quarter, meaning it set aside more cash for people falling behind on repayments.

The number of customers falling into arrears on credit cards continued to increase while overall arrears remained broadly stable.

The amount of cash deposited with the bank grew by 1.7% to £67.3 billion, from £66.2 billion the previous year, as it added 27,000 net “active” customer accounts during the quarter.

Virgin Money, which had about 6.6 million customers at the end of the 2023 financial year, has been focused on cutting costs and driving a shift towards online and mobile banking.

It said it was on track to meet its target of saving £200 million a year through restructuring, and said it closed 39 branches in the latest three-month period with the loss of about 150 full-time jobs.