The mutual already suspended repossessions and waived arrears until April in light of Covid-19 and the extended support will be part of further forbearance announced next week ahead of the Budget.
Its financial results for the year ending 31 December showed its arrears ratio ticked up to 0.62 per cent from 0.54 per cent, which chief executive Richard Fearon (pictured) said was still “well below” the market average and showed the strength of the mutual’s underwriting.
Its borrowers’ finances appeared to be back on track for the most part, as the majority of the 27,500 mortgage holders who took a payment holiday last year had resumed payments.
Profits and lending drop
Leeds Building Society’s gross mortgage lending fell from £3.5bn to £2.5bn for the year and profit before tax declined to £80.7m compared to £88m in 2019.
Growth picked up in the second half of the year with £1.5bn of gross lending, compared to £1bn in the first half.
Fearon described 2020 as a “game of two halves” saying the mutual rebounded powerfully in the second half of the year and ended with a record December for mortgage applications.
Increased mortgage activity continued into this year as mortgage applications almost doubled in January, Fearon added.
He said: “A lot of those people applying for purchases in January would not necessarily be expecting to meet the deadline for stamp duty holiday as that was before the recent speculation.
“That suggests there will be a good degree of resilience in terms of the market.”
Unafflicted investments
Leeds Building Society was able to increase its capital and reserves slightly by £500,000 to £1.35bn and said its usual “prudent approach” allowed it to withstand the impact of the economic environment.
Fearon said: “One of the strange things about last year is the pandemic didn’t disrupt our investment programme, it actually accelerated it. We delivered everything we intended to.”
New developments within the mutual include its relocation of its head office in Leeds and the launch of its Mortgage Hub platform. It plans add extra features to its Hub along with the pilot of the Lender Connect function which will allow brokers to send information from their system to Leeds Building Society’s with one click.
The mutual also hired new underwriters and expanded its business development team to support its service levels.
Leeds Building Society’s plan to expand further into the buy-to-let market was slowed by the pandemic and while it returned to the holiday let segment it has yet to come back into homes in multiple occupancy (HMO) lending.
Fearon said it would take some time for the mutual to resume in all areas of lending or expand into new segments but said plans were being kept under review.
He added: “Our strategy is really working. I look to the year ahead and I’m expecting to see some real mortgage growth from us.”
