In CML's list of the 20 largest lenders in 2014, Santander saw a second successive year of growth – up 50% on 2013 – to regain second position on the list with £27.5bn lent, while Nationwide came close behind with £26.9bn.
Challenger bank Aldermore came in sixteenth place, and Paragon made the top 20 for the first time.
CML said that the list reflects a competitive market. Total lending by the six largest firms grew by 17%, and they maintained their aggregate market share. But medium-sized lenders recorded a collective 46% growth in activity.
Aggregate gross lending last year showed strong growth, rising by 14% to £203 billion (excluding lending to housing associations, which the Bank of England has recently removed from its mortgage lending data). However the figures are still a long way from the levels seen at the peak in 2007, when aggregate lending totalled £357 billion.
This year’s data continues to be boosted by government home-buyer initiatives and ultra low interest rates, which give a stimulus to the housing market that was not there before the credit crunch. Notwithstanding this, levels of activity and competition in the market in 2014 were looking more “normal” than we saw throughout the credit crunch, according to CML.
The data also shows that in the run-up to the credit crunch, competition for business grew ever stronger and, as a result, the six largest lenders advanced a declining share of new business, accounting for around 60% of aggregate lending in 2007. During the financial crisis, however, the twin effects of lenders exiting the market and other firms merging caused this trend to reverse sharply, so that in 2009 86% of new business was advanced by the six largest lenders.
That heavy concentration has slowly abated in succeeding years, with smaller lenders once again writing a larger share of new mortgages. Last year, the six largest lenders accounted for 72% of activity, although this was little changed from 2013, while the second tier – those ranked from seventh to 20th in our list – accounted for 20%, again unchanged from 2013.
Overall, the six largest lenders saw growth in activity of 17%. But the lenders below this (those ranked seventh to 20th) saw much stronger growth – by 46% overall. Notable amongst these, four lenders experienced significant growth in volumes, resulting in each moving a number of places up the gross lending table: Bank of Ireland doubled its lending in 2015, and OneSavings Bank (88%), Paragon (75%) and Clydesdale 61%) also saw strong increases in volume.
