Bank to end new mortgage lending due to market pressures

Paul Lynam, chief executive, Secure Trust Bank

Secure Trust Bank has said it plans to cease all new mortgage lending until “conditions become more favourable”.

The group said it had noted lenders were increasingly competing on price and risk appetite to drive new residential mortgage business volumes.

Secure Trust Bank said that during the second half of 2018, market pressures and competition intensified, driven by continued uncertainties in the wider housing market which have put the mortgage industry “under huge pressure”.

It said: “Having considered all of these factors, Secure Trust Bank is proposing to cease origination of new residential mortgage business until conditions become more favourable. Any changes in the business that may arise from this proposal, following the conclusion of the consultation period with the staff affected, are not expected to have a material impact on 2018 and 2019 earnings.”

In an update this morning on its trading for the year to the end of December, Secure Trust Bank has said its repositioning towards lower risk lending across a focused group of attractive market segments continued to drive profit growth in 2018.

The bank said it continued to trade strongly in the final period of the year.

Customer numbers and the associated retail finance, motor finance, mortgages and SME lending balances continued to grow, “in a carefully controlled manner” during the period with customer lending balances exceeding £2bn for the first time, which it described as an “important milestone”.

Secure Trust Bank said that, given the heightened economic and political uncertainty, the group continues to be selective in respect of new lending activities.

The group said: “The strategic repositioning of the group towards lower risk lending across a focused group of attractive market segments continued to drive profit growth and improve the credit quality of new customer loan originations. The legacy subprime motor portfolio has, as expected, been run-down to immaterial levels and the resulting shift in the portfolio mix has driven the expected significant reduction in impairments. The group is progressing plans to offer a broader range of motor finance products in the prime end of the market.”

It added: “The group entered 2019 with positive business momentum, robust capital positions and very strong liquidity and remains well placed to pursue its strategic priorities.”

Click here to sign up to receive our new South West business news...
Close