Record year for Coventry

Robust growth in its savings book delivered a 97% increase in Coventry’s net mortgage lending last year – a record for the mutual.

In its full-year results for 2007 published last week, Coventry reveals that net lending increased to £1.7bn while gross mortgage advances spiralled to more than £4.2bn.

Coventry chief executive David Stewart says: “We have stuck with a traditional business model and still fund most of our lending with retail savings deposits.

“In fact, as of December 31, 95% of our mortgage book was funded by these reserves and capital.”

He adds: “As the money markets began to tighten in the middle of last year, we moved quickly to attract new savings balances and by doing so ensured that we could easily meet strong consumer demand.”

The mutual also reveals that just 0.15% of its borrowers are six months or more in arrears, compared with the Council of Mortgage Lenders’ stated average of 0.48%. Some 0.55% of the society’s mortgages are three months or more in arrears.

Stewart says: “The overwhelming majority of our lending continues to be in low risk sectors and we maintain strict limits to control our exposure to potentially higher risk lending.”

He says the maximum LTV for Coventry’s buy-to-let deals is 85% while the average LTV for its total mortgage book at the end of 2007 stood at 45% after being adjusted for inflation.

S tewart adds that Coventry’s unsecured lending totalled £55m last year. These loans represented less than 1% of the society’s total outstanding loan book.

He says: “As in previous years, our mortgage growth in 2007 was organic. We’ve never bought a mortgage book and prefer to retain control of origination and underwriting. I’m sure this policy has helped us to maintain high asset quality.”