This spring may herald new life for our industry

15 March 2010

A few positive signs are emerging in the mortgage and property sectors as snowdrops flourish and daffodils slowly emerge after a long, harsh winter.

Alliance & Leicester recently launched a £1bn residential mortgage-backed securitisation deal. This is the first time this year that Santander has entered the securitisation market. Ratings agency Moody’s says the issue is backed by a pool of prime UK residential mortgages. A&L was a £400m deal in August 2008. At the time it was only the second securitisation deal since the credit crunch bit in 2007.

The Co-operative Bank also launched its first RMBS deal in February, worth £2.5bn and backed by prime mortgages from its subsidiary Britannia Building Society.

And this deal followed a £2.5bn securitisation issuance from Lloyds Banking Group at the end of January, which the bank said was partially driven by US investor demand.

Of course, it’s too early to state boldly that this activity heralds a return to regular big securitisation deals but it’s certainly a step in the right direction.

Meanwhile, amid the negative press coverage of the latest round of lenders’ financial results it was nice to see Rightmove announce a pre-tax profit of £30m for 2009 compared with a profit of £25.5m in 2008.

Good housing news stories are often overlooked by the national media in favour of headline-grabbing failures

Rightmove grew its number of advertisers from 16,741 to 17,664 during the year, earning an average revenue per advertiser of £308 a month.
The company says last year’s increase in profits was driven by the effect of some of the cost-cutting measures it undertook in 2008 along with an increase in average online spend.

Rightmove is leading a move away from traditional media and towards online property advertising.

And Moneysupermarket.com, parent of lead generation specialist Paaleads.com, reported a pre-tax profit of £3.18m compared with a loss of some £51m in 2008.

It’s also good to see that Leeds Building Society, the UK’s sixth largest mutual, made a pre-tax profit of £31.7m in 2009, up from £20.3m in 2008.

Leeds’ profit before impairments and provisions rose to a record £80m compared with 2008’s £68.6m but its new mortgage lending was down to £922m from £1.28bn in 2008.

Coventry Building Society saw a pre-tax profit of £56.2m in 2009 compared with £26.4m in 2008. It made a record operating profit before impairments of £75m against £71.7m the year before.

It also undertook gross mortgage lending of more than £2.7bn, representing 15% of all new lending by building societies in the year.

While it would be easy for me to cite numerous less attractive results for the past financial year good news stories such as the ones I have mentioned often get overlooked by the media in favour of headline-grabbing failures.

My point is that there are positives to be taken from the latest round of results and for some firms at least there appears to be light at the end of the tunnel. Let’s hope that spring really has sprung this time.