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Lloyds Banking Group recorded its biggest-ever day of mortgage lending in March as UK homebuyers rushed to make the most of a stamp obligation vacation earlier than the window closed.
The high-street financial institution on Thursday mentioned it lent to twenty,000 first-time consumers within the first three months of the yr, and bought a report 5,000 mortgages to consumers finishing on March 27. Lloyds’ complete mortgage e book grew by £4.8bn to £317.1bn over the quarter.
The push got here days earlier than stamp obligation — a tax levied on property purchases — rose again to pre-2022 ranges on April 1. The modifications imply that first-time consumers will now pay the tax on properties price £300,000 or extra, relatively than £425,000 beforehand, with comparable modifications for non-first time consumers.
Lloyds’ chief monetary officer William Chalmers mentioned the enhance in mortgage lending was prone to subside all through the remainder of the yr, as many shoppers had introduced ahead deliberate purchases.
“I’d be shocked if mortgage development is sort of as sturdy going into quarter two because it was in quarter one due to that convey ahead impact,” he mentioned.
Homebuyers have additionally been helped by easing mortgage rates in latest weeks as lenders have lower costs within the wake of US President Donald Trump’s tariffs. The typical two-year fastened residential mortgage fee was 5.18 per cent on Thursday, in response to information supplier Moneyfacts, down from 5.2 per cent on Wednesday.
“[Mortgage] charges have considerably come down over the course of latest weeks because the expectation of tariff-induced lowdown in financial projections [has] triggered folks to assume that perhaps charges might be diminished quicker than beforehand thought,” mentioned Chalmers.
His feedback got here as information launched by the Financial institution of England on Thursday confirmed that mortgage approvals fell for a 3rd consecutive month in March, as the frenzy to beat the stamp obligation deadline died down quickly.
Internet mortgage lending jumped from £3.3bn in February to £13bn in March. However mortgage approvals for home purchases — reflecting gross sales which were agreed however will nonetheless take about two months to finish — fell from 65,100 in February to 64,300 in March.
Lloyds’ first-quarter earnings fell 7 per cent yr on yr to £1.5bn — in keeping with expectations — because it put aside more cash than anticipated for dangerous loans in anticipation of the financial affect from US tariffs. Revenues rose 4 per cent yr on yr to £4.4bn.
The financial institution put aside £309mn for dangerous loans, greater than analysts’ expectations of £279mn, because it added a £35mn provision to account for modifications within the financial outlook linked to US tariffs.
Lloyds, seen as a bellwether for the UK financial system, indicated that total credit score high quality remained resilient, with “secure and benign credit score efficiency within the first quarter”.
Chalmers mentioned Lloyds’ direct publicity to UK companies that export to the US represented lower than 1 per cent of its complete mortgage e book however that executives remained “vigilant for any potential second order affect” to the UK financial system.
The financial institution’s web curiosity margin — the distinction between the curiosity it expenses on loans and the speed it pays on buyer deposits — rose to three.03 per cent, from 2.97 per cent within the earlier quarter. The enhance was pushed by so-called structural hedging, which the financial institution makes use of to easy the affect of falling charges on its margins.
Lloyds didn’t make any further provisions linked to potential liabilities from its motor finance enterprise, having beforehand put aside greater than £1bn to cowl the prices of a probe into the potential mis-selling of automobile loans.
The business is awaiting a Supreme Courtroom determination on whether or not it was lawful for banks to pay fee to automobile sellers if prospects had not given knowledgeable consent for such an association.
Lloyds is coming into the ultimate phases of a £4bn funding plan to develop new income streams which might be much less intently tied to the rate of interest cycle. It has introduced 316 department closures and 500 job cuts thus far this yr.
