by Mark Johnston
Leeds Building Society has announced that it will boost its mortgage lending in 2011 following the news that it took deposits to record levels. The building society agreed that it would increase its lending to mortgage customers by a massive 30% which is great news in a struggling industry that has seen mortgage lending fall to some of the lowest levels since the 80’s.
Last year the northern based building society increased its levels by 6% which in an industry that is lowering the amount it lends to customers was seen as big news. But following £984 million in mortgages sales they are now set to increase this well over the one billion mark to £1.3 billion, an increase of around 30%.
Leeds Building Society chief executive Ian Ward said: “We’re in a strong funding position, we’ve increased savings balances to a record £7bn and have raised wholesale funding, so we think it’s a sensible time to push out growth,”
The rest of the market are already struggling especially now that swap rates are on the increase and capital rules mean that banks and building societies are expected to hold a lot more cash in reserve. Leeds building society are hoping to take advantage of their strong performance in securing savings which will allow them to increase lending when others cant. Mr ward is hoping that this will give the building society that competitive advantage and allow them to take a much larger slice of the UK market.
Although Leeds announced a hike in their pre tax profits to £42.2 million they weren’t the only ones who were posting a surge in profits. Skipton building society were hot on their heels with results showing that they had al but doubled their annual profits. Back in 2009 they posted £18 million which has risen to £35 million following a sharp drop in the amount of bad debt they wrote off.
The Skipton’s chief executive David Cutter commented on the building societies out look by saying: “continued buffets from external market developments such as the impact of government austerity measures”
Just recently the Leeds building society announced that it will launch a new product to help first time buyers. The new savings product is designed to help struggling first time buyers onto the housing market.
The northern based building society has designed what they have named the Mortgage Saver account. The savings account is designed to help first time buyers purchase their first home.
The account will pay double the amount of interest of a normal savings account but more importantly they hope it will focus first time buyers to save for their deposits and become a key part of their plan to get onto the property market.
The sales and marketing director at Leeds Building Society Kim Rebecch said: “This product offers first-time buyers an excellent introduction to the mortgage process by encouraging and supporting, through double interest, the process of saving up for a deposit. Furthermore, the double interest is paid in the form of a cashback, which means it can be paid gross. We also include interest earned over the life of the savings account, so the value of the cashback is even higher.”
The building society carried out extensive research to indentify what would help first time buyers. Ms Rebecchi went on to say: “Customers will benefit from regular reviews with qualified mortgage advisers so that they fully understand the amount they can borrow and the costs involved as their circumstances and the market change.”
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