Virgin Money has been increasing its share of the mortgage market faster than its competitors, the newly floated bank has said.
The bank, which is part-owned by Sir Richard Branson, said it had a 3.6% share of mortgage lending in the first three months of the year – compared with its traditional share of 1.7% – and at a time when lending in the market was falling.
Figures from the Bank of England showed that lending flatlined in March, despite mortgage rates falling to new record lows. The Bank said 61,341 loans were approved for house purchases during the month, compared with 61,523 in February.
March’s figure was up on the previous six-month average of 60,303, but below the 67,033 approvals in the same month of 2014. Remortgage activity remained muted but the number of approvals was up by 1.2% year-on-year, at 32,591.
Several sources have highlighted a slowdown in lending and house price growth since the autumn, even though banks and building societies have been cutting interest rates to try to win market share.
Matthew Pointon, housing economist at Capital Economics, said the looming election may be playing a part.
“Some buyers may be holding back to make use of the various home-buying inducements currently being promised,” he said. “But with mortgage rates continuing to fall that shouldn’t derail a steady recovery in lending this year.”
Virgin Money has been offering competitive rates on tracker mortgages and buy-to-let loans.
It said in a trading update: “As a consequence of the high number of mortgage applications received in [the first quarter] of 2015, the group has started the second quarter with a strong mortgage pipeline.”
Its much-anticipated current account has been rolled out and is available in 75 of its branches, largely formed from the former Northern Rock outlets it bought from the government in 2011 following the nationalisation of the troubled lender in 2008.
But Virgin is not chasing new business hard, as its boss, Jayne-Anne Gadhia, has argued that the free-in-credit current account model used by the major players is uncompetitive.
“We continue to challenge the barriers to entry and anti-competitive nature of the current account market – particularly the free-if-in-credit model and lack of fair access to the payments infrastructure. While these conditions persist, we have limited our participation in the market and continue to build capability in order to be ready for the future,” Virgin Money said.
The bank was floated in November after delays caused by market turbulence. Its shares were up nearly 2% at 401.2p in early trading, above the 283p when first sold to investors.
Virgin Money is also expanding in to the credit card market after taking over the MBNA business. “We now have the full capability to originate and service our own cards, and this achievement marks the critical next step in the development of a major business line,” said Gadhia.
