The bank published its results yesterday for the nine months ending September 2012 declaring gross mortgage lending of £11.5bn - 22% of which was issued to first-time buyers.
This is compared to £16.8bn gross lending last year.
Its gross mortgage market share dropped from 16.3% to 10.8% and its mortgage book shrank from £172.6bn to £167.4bn year on year.
However the bank did report a 4% increase in profit before tax to £1,098 million and lending to small and medium enterprises increased by 20%.
The bank said that it had taken a deliberate decision to cut back hard on interest-only and high loan-to-value mortgage lending to raise the quality of its mortgage book.
Its numbers were also skewed by a series of one-off credits and charges.
There were £335 million writedowns on old commercial loan books and a further £232 million provision to cover compensation payments which may have to be made to customers.
There is no extra money set aside for payment protection mis-selling but new provisions for interest rate swaps sold to small businesses and for interest-only mortgages.
Ana BotÃn, chief executive officer of Santander UK, said: “We completed the first growth capital loans through our Breakthrough programme, which offers funding, support and expert advice to the UK's fast-growth entrepreneurial smaller companies as we strive to become the SME bank of choice.”
Santander has a Core Tier 1 Capital ratio of 12.8% and retail deposit inflows of £9bn said it would continue to focus on gathering deposits.
