Leeds Building Society Lend a Hand

by Mark Johnston

The Leeds Building Society has pledged to help the mortgage market by targeting an increase in lending by up to 25 per cent during 2011. Leeds Building Society reported a tidy £42.2 million pre tax profits last year and by increasing their lending to borrowers, we can be sure that their profits will be suitably increased this year too.

In 2009, the Society reported a £31.7 million per tax profit, only 66.6 per cent of their current pre tax profits. Putting this in perspective, Lloyds TSB’s pre tax profits for the same period were £281 million. Small profit for a lender but very respectable indeed.

With the average Loan to Value (LTV) of just about 53 per cent, new mortgage lending at the Leeds Building Society has risen 7 per cent from £922 million to £984 million.

Ian Ward, Chief executive said: “In 2011, we plan to increase our new lending by at least 25 per cent to around £1.25bn. This will be welcomed by home buyers as we provide more capacity and choice to the UK mortgage market.

“Leeds Building Society has again proven its ability to deliver higher levels of profitability, savings balances and new mortgage lending as well as an increase in members and very strong capital and reserves. This means that we are in an excellent position to increase new lending significantly in 2011 and continue to be a successful, independent building society throughout this year and beyond.”

Leeds Building Society’s sales and marketing director mentioned “We have looked carefully at the buy-to-let market and reduced this two-year discount, available up to 70 per cent, by 0.30 per cent.

“This highly competitive rate compliments our existing two-year discount available up to 65 per cent loan-to-value at only 4.29 per cent.”

They have also made available an up to 70 per cent loan to value amount to borrowers and have extended an offer of a 10 per cent repayment without any penalties.

In addition to the societies pledge, five local authorities, including Warrington, Blackpool, Newcastle under Lyme, Northumberland and East Lothian will be piloting this new initiative, which will see first time buyers with only a 5 per cent deposit helped with a top up from their local council.

Lloyds TSB is the first to sign up to the programme. The councils will put 20 per cent of the price in a Lloyds TSB account, the funds will not go to the buyer and the lender will ask for 5 per cent of this deposit.

This is a risky step for the local authorities and only those that are able to afford the monthly repayments will benefit from help through this scheme. The councils do receive a generous interest payment for their loan amount and it’s not surprising that a further 10 councils are waiting to jump on this band wagon. It’s estimated that over 300 first time buyers will be helped in each area and when further councils join, thousands could be helped.

It’s pleasing to see that there is help from not just the local authorities but from the lenders too and with the price of houses anticipated to remain low for the next few months; this is an ideal time to buy a house.

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