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Lloyds Banking Group recorded its biggest-ever day of mortgage lending in March as UK homebuyers rushed to reap the benefits of a stamp responsibility vacation earlier than the window closed.
The high-street financial institution on Thursday stated it lent to twenty,000 first-time consumers within the first three months of the 12 months, and bought a document 5,000 mortgages to consumers finishing on March 27. Lloyds’ whole mortgage ebook grew by £4.8bn to £317.1bn over the quarter.
The frenzy got here days earlier than stamp responsibility — a tax levied on property purchases — rose again to pre-2022 ranges on April 1. The adjustments imply that first-time consumers will now pay the tax on properties price £300,000 or extra, somewhat than £425,000 beforehand, with comparable adjustments for non-first time consumers.
Lloyds’ chief monetary officer William Chalmers stated the increase in mortgage lending was more likely to subside all through the remainder of the 12 months, as many shoppers had introduced ahead deliberate purchases.
“I’d be shocked if mortgage development is sort of as sturdy going into quarter 2 because it was in quarter 1 due to that carry ahead impact,” he stated.
Homebuyers have additionally been helped by easing mortgage charges 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 charge was 5.18 per cent on Thursday, in response to knowledge 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] prompted individuals to suppose that possibly charges shall be decreased sooner than beforehand thought,” stated Chalmers.
His feedback got here as knowledge launched by the Financial institution of England on Thursday confirmed that mortgage approvals fell for a 3rd consecutive month in March, as the push to beat the stamp responsibility deadline died down quickly.
Web 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 income fell 7 per cent 12 months on 12 months to £1.5bn — according to expectations — because it put aside more cash than anticipated for unhealthy loans in anticipation of the financial affect from US tariffs. Revenues rose 4 per cent 12 months on 12 months to £4.4bn.
The financial institution put aside £309mn for unhealthy loans, increased than analysts’ expectations of £279mn, because it added a £35mn provision to account for adjustments within the financial outlook linked to US tariffs.
Lloyds, seen as a bellwether for the UK financial system, indicated that general credit score high quality remained resilient, with “secure and benign credit score efficiency within the first quarter”.
Chalmers stated Lloyds’ direct publicity to UK companies that export to the US represented lower than 1 per cent of its whole mortgage ebook 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 fees 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 increase was pushed by so-called structural hedging, which the financial institution makes use of to clean 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 trade is awaiting a Supreme Court docket resolution on whether or not it was lawful for banks to pay fee to automobile sellers if clients had not given knowledgeable consent for such an association.
Lloyds is getting into the ultimate levels of a £4bn funding plan to develop new income streams which can be much less intently tied to the rate of interest cycle. It has introduced 316 department closures and 500 job cuts up to now this 12 months.
