Despite this, Leeds Building Society saw its mortgage market share increase from 1.6 per cent to two per cent, and its first-time buyer base also went up considerably.
Speaking to Mortgage Solutions, chief executive Richard Fearon (pictured) said Leeds Building Society’s first-time buyer market share rose by 30 per cent year-on-year (YOY), and more than half of its lending went to new homeowners. This was up from a third of business previously and represented 17,700 first-time buyers.
Innovative solutions for first-time buyers
“That’s a real step forward, and I think that’s been a result of two things. One is around innovation; for example, the Experian Boost work that we did. We launched last year where people boost their credit scores by factoring in regular payments,” Fearon said.
He added that the increase in its first-time buyer share was due to its “focus” on the market, pointing to its withdrawal from lending on second homes and restrictions around holiday let lending announced today.
“That real focus on aspiring homeowners is paying off,” Fearon added.
Leeds Building Society also launched a shared ownership savers product for borrowers looking to boost their savings in order to staircase, and a home deposit saver deal.
Fearon said there had been a lot of traction for these options due to their innovative nature, adding that the shared ownership saver had received a lot of demand in recent weeks.
Speaking of wider lending options for first-time buyers, Fearon said the 99 per cent mortgage proposed by the government would boost demand, but the supply side still needed to be addressed.
He said: “Unless you fix the supply of new homes and building houses, then prices would simply increase and, ultimately, whilst a few first-time buyers right here and right now would benefit, over the long term you’re just going to exclude more first-time buyers from the market.”
Strong mortgage activity
At the end of 2023, Leeds Building Society’s mortgage book reached a record high of £21.8bn, up from £20.3bn in 2022.
He said falling swap rates and lower mortgage pricing had brought people back into the market, resulting in the mutual experiencing its “biggest month ever” in January.
Fearon said: “That shows there is strong, resilient demand there.”
Its membership rose by 10 per cent to a record high of 919,000, which included 35,000 new mortgage members.
The average loan to value ratio of new lending was 62.3 per cent, while across its book, this was 51.2 per cent. The level of mortgage borrowers in arrears rose slightly from 0.58 per cent in 2022 to 0.68 per cent last year, which the mutual said demonstrated the “robustness of affordability testing and lending criteria”.
Leeds Building Society reported the second highest pre-tax profit in its history at £181.5m, down from 2022’s £220.5m.
Looking forward, Fearon said the mutual had a strong start to the year and he was confident about its performance.
He added: “We’re investing a great deal into a better broker experience, a better customer experience. We’ve previously invested in what was the mortgage hub for new mortgages. One of the things I’m really excited about this year is that our mortgage retention technology is going to be transformed. We’re talking a matter of months away.
“We’re trying to get that as good as our new lending because, at the moment, it needs investment. So, I’m really excited about when that happens, because I think it’d be a fantastic experience for brokers and it’ll allow us to give them more options and support our very valued broker partners.”
