“Why change a winning formula?” says Leeds Building Society boss after record first half

GROWTH in the mortgage sector has led to a record first half for Leeds Building Society, with pre-tax profits increasing 5% on the same period last year.

Leeds, the UK’s fifth largest building society, returned first half profits of £58m, with mortgage lending responsible for sustained growth.

The building society saw record net residential lending of £919m, up from £668m in the first half of last year and helped 4,000 first time buyers on the property ladder.

Mortgage balances (of £12.2bn) and savings balances (of £10.6bn) are all higher than at any time in its history.

Peter Hill spoke with TheBusinessDesk.com. He said: “This is a really good time be a member of Leeds Building Society. Mortgage rates on new lending have reached new lows, with lots below 2%. Although it is tought times to be a saver, we consistently pay more than the average.

“We’ve seen very strong growth in results, new lending has increased and that’s what has helped strong profit performance.”

The Bank of England’s decision to lower interest rates to an historic 0.25% low yesterday would only exacerbate that, said Mr Hill.

On the impact of the Brexit decision in June, Mr Hill predicted that there would would be easing in the short term. He said: “The driver for this easing will be uncertainty, but we’re coming off the back of a very strong position, so we are not looking at a cliff edge here.

“The mortgage market has been very strong in later half of year, with lots of capacity to lend which is different from the financial crisis. June lending figures reached £20.1bn which is highest June figure since 2008.”

This week it was also announced that home ownership was at its lowest level in 30 years.
Mr Hill said: “We’ve been seeing the long term trends in homeownership for a while now. We have seen a rise in the private rented sector, a reduction in the number of households that own their own house with a mortgage, but we have also seen an increase in the number of householders who own outright.

He said that two years ago, it became the first time in modern history that the number of properties owned without a mortgage exceeded those with a mortgage.

“Fundamental changes mean it is difficult to get on property ladder. Schemes like help to buy have been introduced to make it easier for young people who want to get in ladder to do so and we are heavily involved in help to buy and first time buyer lending has been success feature of our performance.

“Quite a lot of that is shared ownership, help to buy, routes to homeownership for those who find it difficult to get a deposit, and the relationship between the average cost of a house and incomes means it is difficult, but not impossible.”

Mr Hill said that Leeds Building Society’s success would continue.

He said: “This is part of a long term success story. We have been growing strongly for past five years, with overall assets up by 47% since 2011. The second half of this year is about more of the same. The referendum vote has and will have an impact on economy, but if you have a strong balance sheet and lots of capital , as well as a good proposition, why change a winning formula?”