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Coventry Building Society achieves record mortgage lending in H1

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  • 29/07/2016
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Coventry Building Society achieves record mortgage lending in H1
Mortgage lending at Coventry Building Society reached a record level of £4.8bn in the first half of 2016, with a strong run in buy-to-let lending playing a key role in the mutual’s mortgage growth.

The Coventry’s mortgage lending for H1 is up from £4.2bn on the previous period, but it explained that the introduction of the 3% Stamp Duty premium for second homes had ‘distorted’ buy-to-let demand during the period.

The society expects overall buy-to-let demand to weaken in light of regulatory proposals on underwriting in the sector, coupled with income tax relief changes for landlords. Earlier this month, Coventry raised its rental cover calculation for buy-to-let mortgage applications from 125% to 140%.

Chief executive at the Coventry, Mark Parsons, said: “The new Stamp Duty rules, together with the forthcoming changes to mortgage interest tax relief, are significant developments within this sector. We will adapt to these changes, as will landlords and tenants, and I am confident that buy-to-let investments will continue to offer secure and high quality lending opportunities.”

Parsons added the mutual was well positioned to continue running a profitable business, despite the outcome of the EU referendum.

“We believe that a simple business model based on low-risk lending and low cost operations contain the elements required to deliver the right outcomes to our savings and borrowing members and the financial strength we need to thrive.”

Coventry said its lending strategy will continue to focus on distributing through mortgage intermediaries with “high-quality, low loan-to-value owner-occupier and low loan-to-value buy-to-let loans within the prime residential market”.

Statutory profit before tax surged by 10% to £110m in the first half of the year, up from £100m in the final six months of 2015.

Impairment charges totalled £0.3m on mortgage assets of £31.3bn, while loans where arrears were greater than 2.5% of the balance were 0.23%, including possessions. This is around a quarter of the industry average of 1%, according to the latest data published by the Prudential Regulation Authority.

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