The mutual credited the rising rate environment as well as an improved income for its performance.
Coventry Building Society said this was complemented by higher savings rates for customers, which led to a six per cent rise in balances to £2.4bn.
Its net interest margin came to 1.16 per cent in 2022, up from 0.9 per cent in 2021. Meanwhile, its net interest income rose by £181m to £657.3m.
Cautious approach to mortgage lending
Although it saw “moderated mortgage growth” in the first half of 2022, business grew by six per cent in the second half of the year which Coventry Building Society said was bolstered by increasing rates.
It said it deliberately took a cautious approach to mortgage lending in the first six months of the year as it wanted to lend responsibly, profitably and protect borrowers from the possibility of negative equity. However, because it stayed open in the midst of market volatility following the mini Budget this led to record levels of activity in the latter half.
It also made the decision not to increase variable mortgage rates in line with the Bank of England base rate and expanded its offering with the launch of new-build products.
Regular contact was made with borrowers to update them on new mortgage products which resulted in £400m of applications a day during busy periods. Its mortgage teams also experienced some of the “busiest days on record” and handled 278,000 broker queries throughout 2022 by answering the phone or responding on web chat within two and a half minutes on average.
Coventry Building Society advanced £8.7bn in mortgages in 2022, down from £9.6bn the prior year. It maintained its three per cent mortgage market share.
New lending on owner-occupier homes made up 67 per cent of all new lending, similar to the 65 per cent share in 2021. This was at an average loan to value (LTV) of 65.3 per cent, almost flat on the previous year’s 65.7 per cent LTV average.
It said due to market conditions, it supported fewer first-time buyers at a total of 5,400, down from 7,100.
Over the year, the mutual’s mortgage assets grew by three per cent to £48bn, which was mostly supported by activity in the second half of 2022. Owner-occupiers accounted for £28.5bn and buy-to-let loans made up £19.2bn.
The £1.4bn growth in its mortgage assets was down compared to £3.1bn in 2021.
Low arrears
It said its mortgage portfolio had “very low and stable arrears” representing 0.17 per cent of mortgages which were more than three months in arrears, flat on 2021.
Coventry Building Society said: “The credit quality of our mortgage book remains very strong although we are mindful of the potential impact on unemployment and house prices from a weaker economy and are monitoring and supporting mortgage customers who may experience payment difficulties.”
The mutual said possessions and forbearance also stayed low, with 27 possession cases at the end of the year, flat on the year before. Forbearance levels fell by 23.5 per cent annually in terms of value and dropped by 12.9 per cent with respect to the number of cases.
Due to ongoing economic uncertainty, the mutual increased its expected credit losses (ECLs) provision to £17m. This was compared to a release of £29m in 2021.
Supported by intermediary partners
Steve Hughes, chief executive of Coventry Building Society, said: “Our strong performance last year was built on the high levels of customer and broker service, in person, online and on the phone. In a year with many challenging moments, our people delivered the consistent value and outstanding service experience that our customers expect.”
Hughes said the mutual made a “significant investment” in its digital infrastructure but the need for human communication remained evident.
He added: “Our intermediary partners played a critical role in this performance. In a year of so much disruption, their advice has never been needed more and we really value the support brokers have given us throughout the year.
“We’re proud to have supported the market through thick and thin in 2022 with a service that brokers can rely on, backed by a range of consistently competitive products and underpinned by our intermediary pledges, including the 48 hours’ notice of product withdrawal.”
50 per cent LTV launch
The mutual has also announced a series of rate cuts alongside the launch of mortgages at 50 per cent loan to value (LTV).
Rate reductions of up to 0.23 per cent have been made on residential mortgages, while for buy-to-let deals, cuts as large as 0.7 per cent have been made.
This includes a two-year fix at 85 per cent LTV with a £999 fee for purchase and remortgage, which now has a rate of 4.62 per cent.
The options at 50 per cent LTV include a five-year fix with a £999 fee. This has a rate of 3.96 per cent and is available for purchase and remortgage, with a £350 cashback option for refinancing.
There is also a five-year fix with a £1,999 fee or buy-to-let product transfer and further advance, priced at 4.7 per cent.
Jonathan Stinton, head of intermediary relationships at Coventry Building Society, said: “We continue to support the market with reduced rates and new products.
“This gives brokers a range of attractive options to discuss with their clients, making it a great time for brokers to re-engage with borrowers and help them find the best possible product.”
