NORTH-EAST based Virgin Money said gross mortgage lending rose 34 per cent in the first quarter, giving the Newcastle lender an estimated 3.6 per cent share in the UK mortgage market.

The bank, which floated last November and entered the FTSE 250 at the end of March, said it had started the second quarter with a strong mortgage pipeline.  

Gross mortgage lending rose in the first three months of the year to £1.6bn against the backdrop of a 3 per cent fall in lending in the market as a whole, while Virgin's net mortgage lending increased 82 per cent during January-March to £664m.

Part-owned by Sir Richard Branson, the bank hopes to break the big four of Barclays, Lloyds, HSBC and Royal Bank of Scotland, which owns Natwest, which control 77 per cent of the personal current account market.

Jayne-Anne Gadhia, chief executive said: “In the first three months of 2015, we have continued on our trajectory of growth while retaining a high-quality balance sheet. We have also maintained strong momentum in the development of the business across multiple business lines, marking significant progress towards our long-term strategic objectives.

“I am particularly pleased that we successfully completed the migration of the credit cards we acquired from MBNA to our own platform and have launched our proposition to customers. 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.

“We are confident that we can continue to build on the strong foundations we have laid for the business, and remain focused on delivering growth, quality and returns for the benefit of all of our stakeholders.”

Virgin Money employs more than 2,500 staff, with about 1,700 people based in Newcastle.

In 2011, it paid the Government £747m for the so-called ‘good bank’ element of Northern Rock, while the ‘bad part’ was subsumed into UK Asset Resolution, which also runs the former Bradford & Bingley mortgage book.

The Virgin update comes as the battle between mortgage lenders to offer ultra-low rates has been stepped up, with the launch of a two-year deal with a record low rate of 1.09 per cent.

The Co-operative Bank has launched the fixed-rate loan, which is available to borrowers with a 40 per cent deposit who can stump up an arrangement fee of £1,499. The average fee for taking out a mortgage is £920.

Two weeks ago HSBC announced a five-year fix at a record low of 1.99 per cent.

But experts say borrowers need to look closely at the fees involved, and the rates people will be charged when the fixed-rate period is finished.