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Mortgage competition pushing lenders to take unsustainable risks – West Brom

  • 27/11/2019
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Mortgage competition pushing lenders to take unsustainable risks – West Brom
West Bromwich Building Society has warned that the competition within the mortgage market has led some lenders to expose themselves to heightened risk.


The mutual revealed in its half year results that its new lending in the six months to the end of September came to just £251m, having almost halved from the £466m of new loans written in the same period last year.

It said that its decision to “moderate lending volumes” was a result of the “intensification of competition” within the market.

In its results statement, the lender said: “A key driver for this reduction was our belief that, at times, the pricing in the market for some lending types had reduced to an extent where the potential costs of the risks of bad debts were not sufficiently covered. 

“It is in these circumstances where a mutual has a clear responsibility to its members not to lend and risk depleting capital.”

The West Brom also pointed out that it remained focused on broadening its mortgage proposition, noting that its new shared ownership deals have proven popular. It highlighted that first-time buyers have accounted for 43 per cent of all lending during the first six months of the financial year.

Despite cutting back on its mortgage lending, the mutual saw profits before tax rise to £6.4m, up from £6m in the same period last year. This was accompanied by a small increase in the net interest margin, from 1.02 per cent to 1.04 per cent.


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