The mutual reported net core residential lending of £289m for the six months to 30 June, compared with £156m in the same period last year.
Total mortgage balances increased by £235m to £5.9bn.
The mutual said it experienced improved customer retention, with 80% of mortgage maturities retained during the first half of the year, up from 64% a year earlier.
Gross lending returned to levels broadly in line with those achieved in 2024, according to the mutual.
Compressed margins affected growth
Andrew Haigh, chief executive of Newcastle Building Society, said the lender remained focused on delivering value to borrowers despite ongoing political and economic uncertainty.
Mortgage book growth came against a backdrop of continued competition across the lending market, which weighed on profitability.
Net interest income fell from £51m to £48.3m during the period, while the net interest margin reduced from 1.57% to 1.35%.
The mutual attributed this to margin compression on new mortgage lending and higher wholesale funding costs.
Underlying operating profit fell from £15.9m to £14.9m, which the mutual said was due to reduced net interest income – which was a result of pressured mortgage margins.
The proportion of mortgages more than three months in arrears stood at 0.8% at the end of June, while the society held just 19 properties in possession across its mortgage book.
Newcastle Building Society recorded a £0.7m impairment charge against loans and advances, compared with no charge a year earlier.
The mutual said this reflected a more cautious economic outlook and updated macroeconomic assumptions used in its provisioning models, rather than a deterioration in borrower performance.
Exercising caution about the housing market
The report showed the society had become more cautious about house price growth expectations. Its weighted economic scenario assumes UK house prices will fall by 0.8% in 2026 and 1.8% in 2027 before returning to growth in 2028.
Further signs of pressure on household finances emerged through increased forbearance activity. The society granted support measures to 250 residential mortgage borrowers during the period, compared with 154 at the end of 2025, with balances covered by forbearance rising to £42m from £27.4m.
Newcastle Building Society’s mortgage portfolio was considerably residential, with prime residential lending accounting for £5.3bn of balances and buy to let (BTL) representing £353m.
Around 9.3% of the residential portfolio had loan-to-value (LTV) ratios above 90% at the end of June, up from 7.2% a year earlier.
Looking ahead, Haigh said the mutual would continue supporting borrowers while investing for long-term growth.
He added: “We will continue to deliver value through competitive savings and mortgage products while investing in the capabilities, partnerships and infrastructure that will enable us to support members and communities for generations to come.”
