The lender said this was due to “the intensity of competition within the mortgage market together with the impact of more stringent customer affordability criteria” which was introduced towards the end of 2017.
It told Mortgage Solutions that tighter stress rate requirements from the Bank of England’s Financial Policy Committee (FPC) had led to it tightening affordability criteria.
However, it added that mortgage balances grew by £457m to £17.0bn, a growth rate of 2.8% since the end of 2017, but this was also below the £675m growth of 4.4% last year.
The Skipton International brand, which also lends mortgages in Guernsey and Jersey and on buy-to-let properties in the UK, saw an increase in mortgage balances of 5.8% to £1.26bn from £1.19bn at 31 December 2017.
The lender added that its “prudent approach to lending” was demonstrated by the number of group residential mortgages in arrears by three months or more falling to only 0.34% of mortgage accounts from 0.36%. The industry average is 0.81%.
Skipton International reported only two mortgage accounts in arrears by three months or more while the closed book Amber Homeloans and North Yorkshire Mortgages had rates of 2.41% and 1.01% respectively.
The average indexed loan-to-value (LTV) of residential mortgages across the division at 30 June 2018 was 47.9%, up slightly from 47.2% at the end of 2017.
TFS withdrawal
Skipton drew down £1bn of funding under the government’s Term Funding Scheme (TFS) before the scheme closed in February.
At the end of the period, the mutual had drawn a total of £1.85bn under the TFS but also repaid £550m over six months.
Overall total group profit before tax was £104.7m, up from £67.0m in June 2017 with underlying group profit before tax up 8.6% at £94.9m from £87.4m.
Skipton group chief executive David Cutter said he was pleased with the society’s performance, noting sustainable growth in mortgage and savings balances and in net interest margin.
“We have continued to invest in our member offering, and Skipton is now one of the few financial services providers on the UK high street to offer full mortgage and financial advice video appointments,” he said.
The service was started in November and allows members to link up via video from home or branch with any of its UK branches, head office or home-based financial advisers.
In February the mutual also announced plans to merge with Holmesdale Building Society.
