According to the lender’s interim results, its mortgage balance grew by 1.7 per cent to £48.8bn, which it said was due to “taking a responsible approach to lending that reflects current market conditions and the needs of our members”.
The firm said that part of this growth was increasing its share in the first-time buyer market but did not provide specific figures.
Arrears balances remained low at around 0.22 per cent of mortgages more than three months in arrears, which is a slight increase on the figure of 0.17 per cent last year.
Coventry Building Society said that the interest rate environment and inflation were impacting homeowners, landlords and tenants and the “full implications of the increase borrowing costs have yet to be seen”.
It added that it had contacted several thousand mortgage borrowers who it felt were the “most affected” and only a “small number” have needed additional help.
The company’s profit before tax came to £269m for the period, which is up from £158m in the first half of last year.
The firm said that the rising interest rate environment “supported an improved income performance”, pointing to a net interest margin of 1.34 per cent, up from 1.11 per cent last year.
Coventry Building Society added that redemptions were “running slightly higher than in previous years” but this was expected as “speculation about further base rate rises may encourage some borrowers to seek more security over the coming months”.
It added that digital infrastructure, mobile app and enhancements to its mortgage servicing were “progressing well with significant deliverables expected during the latter half of 2023”.
Coventry: ‘A strong but balanced performance’
Steve Hughes, chief executive of Coventry Building Society, said: “Changes to the interest rate environment have created volatility in markets and a fast-moving situation for savers and borrowers alike.
“In this context, we have delivered a strong but importantly a balanced performance by concentrating on great value products and outstanding service, and ensuring we have the right foundations in place to support our future success.”
He added: “We have proactively supported borrowers, delivered greater benefit to savers and enhanced our financial resilience. Our growth has been ahead of the market, creating jobs and delivering on our sustainability goals. These are important proof points of the mutual model.”
