Abbey crowned king of mortgage lending

29 July 2008

Abbey has knocked Halifax off the top spot as the UK’s largest mortgage lender, after its Spanish owner Santander revealed the bank now writes one in every four new mortgages.

Despite the onslaught of the credit crunch hitting mortgage lenders hard for nearly 12 months now, Abbey has increased its presence in the market from an average of 8% in 2007 to 26% in the first six months of this year. This knocks Halifax off the top spot as the UK's biggest lender, with the banking group boasting just over 20% of the market in 2006.

And Abbey’s domination of the mortgage market is likely to continue if its planned merger with Alliance & Leicester goes ahead. Earlier this month, Santander announced it had made a bid for the rival high street bank, and would bring the two brands together to create a super lender. However, Santander has announced its intention to trim the combined mortgage books of the two lenders.

Abbey’s gain in market share is largely the result of other big banks - such as Halifax and Northern Rock - restricting new lending, and to a lesser extent also reflects the absence of several players who have gone under as a result of the credit crunch.

However, Abbey has increased its lending activity with specific focus on retaining existing customers. Unlike many other lenders, Abbey only relies on wholesale funding for 10% of its lending activity, so it has not been hit by the credit crunch in the same way that other firms have.

Santander’s financial results also show a 135% increase in Abbey credit card sales, and a 50% rise in cash deposits to £2,884 million. In addition, current account customers are likely to get a boost from the news that Abbey intends to “develop” this area of its business, seeing the current account relationship as a “key driver of a customer’s overall experience” with a bank.

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