Leeds, which joins Coventry, Barclays and Santander in passing on the full 0.25% interest rate cut to Standard Variable Rate borrowers, confirmed profits before tax rose by 5% in the first six months.
The UK’s fifth largest mutual lent over £500m to over 4,000 first-time buyers and grew total membership by 30,000 in the period.
Leeds CEO, Peter Hill, said: “We remain focused on helping more borrowers by offering competitive mainstream products, and supporting those who are not well served by the wider market.”
On the package of measures announced yesterday by the Bank of England, Hill told Mortgage Solutions he had seen the Term Funding Scheme outline (TFS) but expected the detail from mid-August.
The Bank of England said it ‘fully expects’ lenders to pass on the 0.25% rate cut to consumers and launched the £100bn TFS yesterday, which is available for four years and targeted to stave off lender complaints about ‘profitability compression’.
Hill who is also chairman of the Council of Mortgage Lenders, said it’s important the same £1.40 collateral requirement for every £1 borrowed required for the Funding for Lending Scheme (FFS) is not replicated for the TFS as this could act as a ‘restraint’ on lenders who are already heavily collateralized.
However, the market is very healthy, he added, with £21bn of lending in June, the highest June figure since 2008 but that consumers may have taken ‘a step back’ taking roughly 10% out of the market since the 23 June referendum.
“I expect this to be short term though. I think the steps taken by the Bank of England will be very helpful and the key difference between this time and the financial crisis is that lenders are willing and are able to lend. Therefore, I expect to see more competition with no supply shortage and consumer confidence determining the size of the market.”
Hill added: “The question is, has the Bank done enough to encourage consumer interest?”