OSB Group reported profit tumbled in the first-half of 2023, after taking a hit from customers acting more quickly than expected to refinance their mortgages at favourable rates.

OSB, which stands for OneSavings Bank, said pretax profit in first-half of 2023 slumped 73% to GBP76.7 million from GBP285.2 million. Net interest income, declined to GBP237.5 million from GBP343.4 million. It reported an adverse underlying effective interest rate adjustment of GBP180.7 million, hurting its bottom-line.

OSB in July said that as its mortgage customers reach the end of their initial fixed term, they chose to refinance earlier than expected and therefore spent less time on the higher reversion rate (SVR). This rate is linked to the Bank of England’s bank base rate and has been rising over the past year as the central bank hikes UK interest rates.

Chief Executive Andy Golding said: “I am disappointed by the results which reflect the adverse EIR adjustment announced in early July, against a backdrop of otherwise strong operational and financial performance in the first half. We continue to do the right thing by our customers by offering a full range of mortgage products, despite the volatile rate environment, resulting in strong demand and higher retention, driving net loan book growth of 4% in the period.