The UK’s fourth-largest building society has announced it is planning to raise residential mortgage lending “four to five times” compared to last year. Is the market taking a turn for the better?
After two tough years, Skipton Building Society has announced a return to “modest growth”, along with plans for a significant increase in mortgage lending – up to four or five times existing levels, according to chief executive David Cutter.
The group’s core lending and mortgage business lost £44 million in 2009 and £16.2 million in 2010 – but is now back in profit, according to Mr Cutter.
Skipton lent almost 10% less in 2010, which has had the knock-on effect of improving its capital reserves. Now armed with a stronger balance sheet, the building society is preparing to raise its lending for residential mortgage customers.
The process has, in part, already begun. Earlier this year, Skipton began increasing the number of buy-to-let mortgages it was offering, targeting the current strong demand for rented accommodation.
Slow road to recovery
While Mr Cutter says Skipton is through the worst, he doesn’t have any rosy predictions for the wider British economy.
He echoed Bank of England Governor Mervyn King’s prediction of “seven lean years”, saying, “It’s a long, slow road to recovery.”
Moneyhighstreet comments: “Skipton’s announcement shows that while conditions are still tough, individual companies are slowly breaking through the downturn. In the case of mortgage lenders, this is great news for borrowers – especially given a tough market in which lenders haven’t always passed on interest rate cuts.”
“An increase in the amount of lending of the kind Skipton is suggesting is also likely to result in a range of new mortgage products, increased competition and more choice for consumers.
“If you are looking for a mortgage, make sure you get the best deals by comparing deals online, and making yourself aware of all the costs and additional fees involved in taking a new house loan.”