Mortgage News
Principality sells estate agent to Connells to focus on mortgage growth
Welsh mutual the Principality has agreed the sale of its estate agency company and struck a deal to outsource its surveying business to Connells to allow it to focus on mortgage growth.
The building society made the announcement in its half year performance statement for the period ended 30 June revealing it had increased its mortgage lending by 7% year-on-year.
Gross mortgage lending reached £613m in the first half of 2014 compared to £572m for H1 2013.
The sale of Peter Alan and the outsourcing of its surveying arm will net Principality £16.4m. The proceeds will be used to provide capital for its core business and open up new investment opportunities.
The lender said its mortgage growth strategy, launched at the start of 2012, has helped it become the sixth largest building society in the UK with net lending of more than £1bn.
Graeme Yorston, group chief executive, said: “Along with the continuation of our 95% mortgage product to help people get onto and move up the housing ladder we also signed up to the Help to Buy equity loan scheme in Wales, as part of our efforts to help the housing market move forward.”
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Principality has also successfully completed its second issuance of Residential Mortgage Backed Securities which attracted £475m of long-term funding to strengthen its overall balance sheet and build its mortgage market share.
Principality’s pre-tax profits rocketed by 160% to £30.6m for H1 2014 surpassing its 2013 year-end profit figures of £28.2m in six months.
The society said the leap in profits was largely due to a pension scheme adjustment which involved a change in the way the scheme was calculated. It will now be based on the Consumer Price Index rather than the Retail Price Index.
Proceeds from the sale of the businesses to Connells will not be included in profit figures until the end of the year.
Yorston said: “As part of our strategy to focus on the core society and grow retail mortgage lending we regularly review our businesses to ensure that they are prospering in our ownership.
“Through this review we have determined that Peter Alan and our surveyor business would be better supported within a group of similar businesses to ensure the potential is optimised.”