A pioneering mortgage product that does not require any deposit from borrowers attracted applications adding up to £62 million in its first nine months, Skipton Building Society has said.
Stuart Haire, 49, the former HSBC banker who joined Skipton Group as its chief executive in December 2022, launched the Track Record product in May as a way of helping renters with good rental payment records but little cash savings. So far 484 borrowers have signed up.
He said it was “early days” for the product and that it always had been seen as niche, but the arrears levels were zero and it was well regarded in the marketplace.
There is speculation that the government is considering announcing a scheme in the budget next week to support 99 per cent mortgages to address the wider problem of “rental prisoners”, who, unable to afford to buy on their own or to get help from family, cannot get on the housing ladder.
The Skipton product bypasses the normal requirement from lenders that borrowers stump up a deposit of at least 5 per cent of the home’s value, usually much more. The requirement for large deposits spread after the collapse in 2007 of Northern Rock, which notoriously had offered 125 per cent mortgages at one point.
Advertisement
Skipton reported an 8 per cent increase in pre-tax profits to £333.4 million as it widened net interest margins and wrote £6.7 billion of new mortgages, up by 6 per cent. It said it had given back £148 million in member benefits through interest rates on savings that were better than average.
However, its Connells estate agency division, which also owns the Hamptons and Countrywide franchises, reported a slump in pre-tax profits from £67.5 million to £13.8 million because of falling home sales. The volume of transactions slipped from 87,000 in 2022 to 70,000, while house prices fell by 3 per cent to 4 per cent, reducing commissions. However, Haire said that in the first few weeks of 2024, sales were up by 12 per cent and viewings up by 14 per cent.
Skipton is Britain’s fourth biggest building society, with 1.2 million members and a £37 billion balance sheet. Including estate agents, it has more than 1,300 branches.
Mortgage arrears levels crept up, albeit from a very low level: 0.23 per cent of mortgage accounts were more than three months behind with payments, compared to 0.17 per cent a year earlier.
• The Co-operative Bank has set aside almost £29 million to compensate customers in its closed mortgage book between 2011 and 2012 after it was found to have “unfairly” increased the interest rates paid by borrowers (Ben Martin writes).
Advertisement
The Financial Ombudsman Service partly upheld two complaints against the lender last November and found it had acted outside the terms of its contract when it increased the standard variable rate paid by customers, many of whom were “mortgage prisoners”.
The redress provision dragged on Co-op Bank’s pre-tax profits, which fell to £71.4 million last year from £132.6 million in 2022, it said yesterday. The lender is in talks on a sale to Coventry Building Society.
