The mutual lent £0.9bn more than the same period in 2020 and grew mortgage lending by 4.4 per cent, agreeing home financing for 16,087 home purchasers and remortgagors in H1.
The group’s arrears position improved slightly during the period for accounts in arrears by three months or more to 0.28 per cent, well below the industry average of 0.85 per cent.
At a time when mortgage prisoners continue to battle for rate caps and with a government reluctant to intervene in the closed mortgage market, on 1 June Skipton effectively brought 4,535 mortgage prisoners in to full membership of the mutual.
Customers of adverse credit subsidiaries, Amber Homeloans and North Yorkshire Mortgages, which both stopped trading in 2010 with £2.5bn of mortgage accounts now down to £500m of balances, will be able to access all of the society’s remortgage options, subject to affordability checks.
Speaking to Mortgage Solutions, David Cutter, Skipton group chief executive, said it was hard to say how many of these would be able to take advantage of their new situation.
“It will be far easier for these borrowers from a customer point of view, but it’s hard to say how many will actually move. These are seasoned mortgages, so by now because many are so seasoned, we don’t expect too much.”
Group profit before tax (PBT) leapt to £159.2m up from £34.4m in H1 the year before.
Profits in the period, under both performance measures, have benefitted from a clawback of loan impairment provisions totalling £14.8m reflecting the updates to the economic outlook in light of the improving COVID-19 situation, mainly driven by the successful roll out of the vaccine.
Meanwhile, Connells completed the acquisition of Countrywide on 8 March 2021, creating the UK’s largest estate agency network of 1,235 branches. The group said the buyout ‘will provide further diversification to the group’s business model, deliver enhanced returns over the medium and longer term and improve the mutual’s capital strength when margins on the mortgage and savings side come under pressure due to competition.
It said: “The higher returns from the estate agency business will support the society’s ongoing investment in its customer proposition and its people and continue to allow it to offer competitive mortgage products to our borrowing members and competitive savings returns to our savings members, in addition to further enhancing its financial advice proposition.”
Mortgage market projections
Cutter said he expected mortgage business to tilt away from purchase towards remortgage with a lot of maturities coming up.
“There’s also an opportunity to shift business back to two-year fixed rates and we expect distribution to remain strong,” he said.
On when rates might bottom out, he said: “I expect them to decline further but when and where they bottom out to depends on lender risk appetite. I expect competition to continue this year and rates have further to go.”
In conclusion, Cutter said: “At a time of continued uncertainty for our customers, colleagues and their families, Skipton’s performance seems a secondary interest while we all adjust to the ongoing impact of the global pandemic. But it is against such a challenging social and economic backdrop that we’ve seen Skipton’s mutuality, agility, and first-rate customer service come to the fore and be reflected in our results today.”