Repayments almost match new business at UK's largest lender
Lloyds Banking Group accounted for 17.1% of UK mortgage completions in the third quarter, according to its results call, yet its mortgage book grew by £300 million, from £324.9 billion to £325.2 billion.
The increase compares with £3.6 billion in the first half, excluding a £1.8 billion securitisation of primarily legacy retail mortgages in April.
https://www.bankofengland.co.uk/statistics/money-and-credit/2026/september-2026
Bank of England figures put market-wide net mortgage borrowing at £4.3 billion in July, followed by £4.2 billion in August and £3.9 billion in September, around £12.4 billion across the quarter.
On that indicative basis, Lloyds' £300 million was roughly 2.4% of the market's net growth.
Mortgage completions versus net growth
Net lending is new business minus repayments and redemptions, so with growth of £300 million, outflows from Lloyds' existing book were close to the value of its new lending in the quarter.
Chief financial officer William Chalmers said the group's mortgage market share of completions was about 17.6% year to date, keeping it comfortably above 17%.
Chalmers put completion margins at around 75 basis points, slightly higher than in the second quarter but below maturity margins, and said the market remained highly competitive.
Looking across the group's lending businesses, he said "higher rates, if sustained, may start to slow asset growth", adding that the strategy would be to balance volume and returns.
He also said Lloyds Premier customers receive a mortgage discount, and that 42% of the group's first-time buyers now take a protection product.
Barclays writes £11 billion in the quarter
Barclays, which competes with Lloyds for mortgage market share, wrote £11 billion of gross mortgage lending in the quarter. Its mortgage balances grew 7% year on year.
Pricing within the group
Halifax, part of Lloyds Banking Group, raised rates for the second time in under two weeks in late July, by up to 0.15% for home movers and first-time buyers, up to 0.20% for remortgage customers and up to 0.10% on product transfers.
The increases followed a rise in swap rates linked to renewed Middle East tensions.
Lloyds cited asset margin compression, particularly in UK mortgages, while structural hedge income lifted its banking net interest margin to 3.25% in the third quarter from 3.22%.
Rate rise in Lloyds' base case
Lloyds' base case now assumes a 25 basis point rise in Bank Rate to 4.00% in November, with CPI peaking at 4.3% in early 2027. House prices are forecast to rise 0.7% this year and 1.7% next.
The Monetary Policy Committee announces its decision on November 5. Diesel passed £2 a litre for the first time at the start of October, up 40.5% since disruption to oil and gas shipments through the Strait of Hormuz began in late February.
House purchase approvals fell to 53,400 in September, the lowest since December 2023, while remortgage approvals rose around 25% to 42,600. The effective rate on newly drawn mortgages increased to 4.63% from 4.60%.
Slower growth forecast from 2027
EY forecasts bank mortgage lending growth of 3.3% in 2026, the only lending category expected to rise, before easing to 2.2% in both 2027 and 2028.
Stage 3 loans made up 1.6% of Lloyds' UK mortgage balances, and the group said arrears remained low and stable. Group statutory profit before tax rose 42% to £6.6 billion for the nine months, and Lloyds said it remained on track to meet its 2026 guidance.
