Lloyds lost market share in UK mortgages last year as Royal Bank of Scotland (RBS), HSBC and other challenger banks gained, according to the figures published by UK Finance yesterday.

The data revealed that Lloyds lost approximately 1% of its UK mortgage market share to competitors, which fell from 22.1% to 21.2% of mortgage balances outstanding in 2017.

RBS was able to jump ahead of Barclays to become the UK’s fourth biggest lender, after growing mortgage balances by almost 7% to reach £136.3bn. Also throughout the year, HSBC grew its market share 0.25 percentage points.

Lloyds currently holds a dominant position in the UK mortgage market, a legacy from its financial crisis-era merger with HBos, the umbrella company for Halifax and Bank of Scotland. However, the new data, which covers 97% of the UK market, further illustrated the repaid growth of challenger banks and building societies that compete with Lloyds and the rest of the “Big Six”.

The rate of increase in total lending slowed from 11% in 2016 to 4% year-on-year in 2017, hitting a total of £257bn. Growth in new lending was strongest among lenders that were ranked between 21 and 30 in 2017, UK Finance reported.

The smaller lenders lent £3bn more for mortgages in 2017, compared to how much they lent in 2016, representing a growth rate of 40%.

Virgin Money, Leeds Building Society, Principality Building Society and OneSavings Bank all grew their mortgage balance sheets by over 10% throughout 2017, whilst Metro Bank’s new mortgage lending increased by a huge 50%, adding 0.19 percentage points of market share.

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