The society’s pre-tax profits were down from £15.9m to £14.2m year-on-year in H1,while net lending for residential mortgages fell by £39m to £181m.
Newcastle said mortgage arrears remained at low levels with 0.38 per cent of mortgages in arrears by three months or more, down from 0.42 per cent in the same period last year. No repossessions were reported.
Total residential lending and advances to customers stood at £2.95bn as of 30 June 2022, compared to £2.7bn in H1 last year.
Buy-to-let lending and advances were down from £390m last year to £387.8m as at 30 June 2022.
Equity release lending and advances has risen from £198m last year to £245.7m in the first six months of 2022.
Growth in adviser services
Other income and charges, which includes income from Newcastle Strategic Solutions and Newcastle Financial Advisers, were £21.9m for the six months ended 30 June 2022 compared to £20.4m for the first half of 2021.
The mutual said that Newcastle Strategic Solutions continued to see growth in its underlying business in the first half of 2022 as well as existing clients adding new services to their savings proposition. This included mobile apps and new savings products.
Newcastle Building Society added that Newcastle Financial Advisers delivered a strong performance over the first half of the year with regulated sales and funds invested both outperforming original targets.
Newcastle Building Society performed ‘remarkably well’
Andrew Haigh (pictured), chief executive at Newcastle said the first half of 2022 had been challenging, but the mutual had performed “remarkably well”.
“We are all living through a period of unparalleled uncertainty and change but with our purpose to ‘connect our communities with a better financial future’ as our guide, we have delivered a strong first half of 2022.
“This can be attributed to our unique strategic approach within and for our region, with each aspect of our business contributing and complementing each other to create a robust business model for the long term,” Haigh said.
He continued that Newcastle Building Society would “need to remain careful, cautious and thoughtful”, pointing to rising inflation, cost of living and economic uncertainty.
“However, we also remain full of ambition and I believe the Society’s plan for continued innovation, growth, and investment will help us find a path during the months and years ahead and we will strive to make as much progress as we can to deliver on our purpose for the benefit of the customers and communities we serve,” he said.
First-time buyer challenges and Deposit Unlock Scheme
Haigh said that the decision to raise the base rate had “stimulated savings rates upwards”, and whilst this was good for some, other customers now had less money to set aside and were using savings to cover rising or unexpected bills.
“These same savings challenges mean that for first-time buyers it is harder than ever to raise a deposit and the continued housing supply shortage means that house price growth continues, albeit at a slower rate.
“Those that are able to get a foot on the property ladder face the challenge of a rising rate environment so we’re seeing an increased demand for longer term fixed rate periods to help borrowers attain mortgage repayment certainty in the face of wider economic uncertainty,” Haigh said.
Haigh said the launch of Newcastle’s Deposit Unlock mortgage product last year was one initiative aimed at helping first time buyers.
He said that it was the largest lender under the initiative and it was operating nationally with 21 participating developers.
Haigh said that 73 per cent applications under the scheme have been from first-time buyers, which he said showed tit was ” helping in exactly the way it was designed”.
He added that he expected interest in the scheme to grow, especially as Help to Buy comes to an end.
