The group achieved a 22.1% share of gross mortgage lending in 2010, down from 24.1% in 2009.
Gross new mortgage lending was £30bn in 2010, compared to £34.7bn in 2009, representing one in five of all mortgages in the UK.
Some £5bn of this was for first-time buyers and the lender says it approved eight out of ten first-time buyer applications in 2010.
The proportion of mortgages on standard variable rates now represents 48% of outstanding balances.
The proportion of mortgages with an LTV of greater than 100% was broadly stable at 13%, but the value of the portfolio with an LTV greater than 100% and more than three months in arrears has increased slightly by £0.2bn and is now £3.2bn, representing 0.9% of the portfolio.
Lloyds says the number of mortgage customers new to arrears has also remained relatively stable in the last twelve months, and is now well below the peak experienced in the second half of 2008.
However, as a result of the early signs of strain it saw in the second half of the year and the subdued economic environment, it expects to see an increase in the secured impairment charge in 2011.
While mortgage balances declined by £3.8bn, it says retail continued to support first-time buyers and home movers with gross mortgage lending of £30bn.
The average LTV on new mortgage lending in the year was 60.9%, compared to 59.3% for 2009, while the average indexed LTV on the mortgage portfolio was 55.6%.
Eric Daniels, group chief executive of Lloyds, says: “2010 was an important year for Lloyds Banking Group, marking our return to profitability, and a further reduction in risk in our business. Our significant progress in the year has positioned the Group well to become the best bank in the UK for all our stakeholders, including our customers, shareholders and employees.”