The lender's quarterly results revealed that net mortgage lending fell by £2.5bn and that overall profits have dropped by 25.9%.
Santander reported Q1 net profits of €1.2bn (£1bn), down from €1.6bn a year earlier.
Ana Botin, chief executive of Santander UK, said the economy "remains subdued" but there should be "greater stability in our operating environment" in the future.
Santander also saw a jump in mortgage arrears with "non-performing loans" increasing to 1.83% of assets from 1.51% a year earlier.
Corporate lending increased by 11% to £20.4bn following a 15% increase in lending to SMEs.
