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Leeds BS reports record gross mortgage lending of £2.5bn

  • 29/07/2022
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Leeds Building Society’s gross mortgage lending in the first half of the year came to £2.5bn, up from £2bn last year and a record for the mutual.

The lender said that nine of its biggest lending days occurred in the first half of the year, leading to the highest number of completions in the first half of the year. A spokesperson said that completions for the first half of the year came to 23,000.

Speaking to this publication, Leeds BS’ chief executive Richard Fearon (pictured) said he expected that strong level of performance to continue in to the second half of the year.

“There are headwinds in terms of interest rate rises, cost of living pressures and so on but the housing market is absolutely resilient…I think we are also seeing the fact that customers are very financially resilient as well because if you look at arrears across the market…they are going down.”

Profit before tax for the period came to £146.5m, which is more than double its profit before tax of £70.3m in the same period last year.

Reserves came to £1.58bn, up from £1.46bn at year-end, which the mutual said was “well above the regulatory requirement”.

The proportion of residential mortgages in arrears, defined as 1.5 per cent or more of outstanding mortgage balances fell to 0.62 per cent, down from 0.66 per cent at year-end.

Fearon said the mutual did not charge any arrears fees.

He continued that this year the mutual would be focusing on how it could help people with affordability and new propositions, then into next year it was looking to move into more product segments.


Further investment in recruitment and technology planned

The report said the firm had recruited around 65 skilled jobs, and that one in five colleagues were now in a technology role.

Fearon said there were plans to recruit more across the board, pointing to investments in call centre, web chat and business development team.

“We’ve got recruitment plans right across the board, and I think it’s one of the real positive things, we’ve got a purpose that is necessary and really successful. We can invest for the future. So it’s really pleasing to be able to do that” he said.

The mutual has also been investing in its technology, upgrading its online mortgage platform Mortgage Hub.

Fearon said feedback on the upgrade has been “tremendous” and there are further plans to enhance the platform, adding product transfer and further advances to the platform in the near future.

The report said multi-year IT transformation” was progressing on plan and on budget and that the mutual had successfully completed the transfer of data centres earlier in the year.


First-time buyers are key segment

It added that total membership increased to 815,000, which included 9,000 new members who were first-time buyers.

Fearon said first-time buyers accounted for around a third of its lending, and that the “biggest challenge” for this borrower group was saving the deposit.

He added that the mutual had some plans to help people save a deposit more quickly, with the aim of unveiling this proposition in the second half of the year.

Fearon continued that as Help to Buy was due to come to an end, it placed “enhanced importance” on shared ownership, noting that Leeds Building Society was a leading lender in that field.

He also pointed to supporting the government’s First Homes scheme, which was launched last year and gives a minimum 30 per cent discount to first-time buyers on new builds.

Fearon noted that the mutual offered improved affordability to first-time buyers who bought new builds with better energy efficiency as bills would be lower so borrowers could afford more.

He cited the example of a customer buying a property valued at £195,000, they would be able to borrow £185,000 instead of £181,000.


Leeds BS to withdraw from second homes lending

The mutual added that it would withdraw lending from second homes, which was defined as people with multiple residences rather than holiday let or buy-to-let, adding that it wanted to focus on other segments such as first-time buyers.

Fearon said that second homes reduced the number of properties available for people to live in, and this was especially acute at a time when housing supply in the UK was “inadequate to meet demand.

“They often lie empty most of the time and they don’t serve the local community or contribute to the local economy. So, we were very thoughtful about this. We think it isn’t compatible with our purpose and we want to focus on putting homeownership within reach and focus on affordable housing,” he explained.

He added that second homes were a modest part of its loan book, but in the second homes market it was a “relatively significant participant”.


A thanks to brokers

Fearon concluded with a thanks to mortgage brokers, adding: “I just want to say a really big thank you to our intermediary partners because I know that right now it’s a tough market. I know that there are lots of product changes and pricing changes and service across the market. You know we want to do our utmost to support them.

“And I just want to thank them for everything that they do in these difficult times.”

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