Aldermore announces £0.1bn drop in retail mortgage balances

However, growth returned in the second half of the year, with net lending rising by £0.1bn as repayment levels fell.

There was growth of 7% in net owner-occupied lending to £2.3bn, with borrowings rising to £0.6bn as proceeds were temporarily withdrawn to manage the appetite for risk and operational capacity during the pandemic having been relaunched in the market.

The majority of the growth was in higher LTV products, offered to customers through better underwriting and risk-based pricing.

The growth in owner occupancy was offset by a reduction in the BTL portfolio, which fell 5% on the year to £4.9bn, largely reflecting the expected maturity of a fixed portfolio five years combined with high levels of market competition.

However, originations increased by 43% to £0.5bn as the group launched a number of limited edition products during the year and loyalty product changes hit an all time high never before reached at £0.8bn, following investment in the Loyalty team and proposal in 2021.

The housing market is expected to slow this fiscal year as rising interest rates and high inflation squeeze household incomes.

House prices have remained resilient to date, supported by limited supply and supportive fiscal policy. However, Aldermore says he now expects “a modest decline in house prices over the next 12 months”.

Aldermore says the development of new owner-occupied proposals and higher activity levels in BTL could offset this pressure, especially as landlords seek to take advantage of strong tenant demand and higher rental prices. .

It was also reported that net lending increased by £1.3bn to £14.7bn in its annual results to June 30.

The group achieved a 30% growth in pre-tax profit from £157.8m to £204.7m. The bank now supports a record 750,000 customers, which it says has helped drive 10% net loan growth with improved margins and a stable cost of risk.

Aldermore Group Chief Executive, Steven Cooper, said: “It has been a positive year for Aldermore, with significant net loan and profit growth resulting in good performance, despite a challenging economic environment. “.

“We are pleased to see a strong increase in lending to first-time homeowners as we continue to help more people realize their dreams of home ownership.”

“We understand that the cost of living crisis has put real pressure on individuals, their families and their businesses in recent months. Our strong profitability and capital position means we are there to support those who face challenges. »

Cooper says the group has “recently embarked on a strategic overhaul of our business”, which he says will provide an “opportunity for growth and better returns”.