Skipton Building Society said that a pioneering mortgage product, which does not require borrowers to make a deposit, attracted applications totalling £62 million during its first nine-month period.
Stuart Haire, 49 years old, a former HSBC Banker, who will be joining Skipton Group in December 2022 as its Chief Executive, launched Track Record in May to help renters with good payment records, but limited cash savings. So far, 484 borrowers are signed up.
He said that the product was still in its “early stages” and had always been considered niche. However, the arrears were at zero and the product was highly regarded on the market.
It is rumored that the government will announce a program in its budget next week that supports 99 percent mortgages, to help address the larger problem of “rental prisoner” who are unable to purchase on their own, or get family assistance, and cannot get onto the housing ladder.
Skipton’s product does not require a deposit from borrowers of more than 5 percent of the value of their home, which is usually required by lenders. After the collapse of Northern Rock in 2007, which famously offered 125 percent mortgages at one time, lenders began requiring large deposits.
Skipton has reported a 8% increase in profits before tax to £333.4m. This is due to the fact that it increased its net interest margins by 6% and issued £6.7billion of new mortgages. It reported that it had returned £148 million to members through better-than-average interest rates.
Connells, the division of its estate agency that also owns Hamptons and Countrywide, however, reported a drop in profits before tax from £67.5 to £13.8 due to a decline in home sales. The number of transactions dropped from 87,000 to 70,000 in 2022, and house prices decreased by 3% to 4%, which reduced commissions. Haire stated that sales and viewings were both up 12 percent in the first weeks of 2024.
Skipton, Britain’s fourth largest building society with 1.2 millions members and a £37-billion balance sheet. It has over 1,300 branches, including estate agents.
The level of arrears on mortgage accounts has crept up, but from a very small base: 0.23 percent of mortgages were behind by more than three month’s worth of payments, as opposed to 0.17 percent a year ago.
The Co-operative Bank has entered into talks with Coventry Building Society about a possible sale.