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Boost in mortgage funds proves mutual sector still keen to lend

Leeds, Skipton and Yorkshire building societies boosted their mortgage lending in 2010, proving that the mutual sector still has an appetite for lending.

Leeds reported pre-tax profits of £42.2m last week and revealed plans to increase its mortgage lending by 25% in 2011 to £1.25bn.

The society increased new lending from £922m to £984m in 2010, a hike of 7%.

During 2010, it successfully raised £250m of 10-year long-term funding through a covered bond issue.

It raised a further £250m of wholesale funding for periods of between three and five years and has now secured the majority of its long-term funding for 2011.

Ian Ward, chief executive of Leeds, says: “In 2011, we plan to increase our new lending by at least 25% to around £1.25bn. This will be welcomed by buyers as we provide more capacity and choice to the mortgage market.”

Skipton also revealed last week that it increased its mortgage lending by 18% to £481m in 2010, up from £407m in 2009.

The society made a group profit before tax from continuing operations of £35m, compared with £18m in 2009 – a 94% increase.

This excludes the one-off gain of £40m from the sale of Callcredit Information Group in December 2009 and the profits it generated that year.

The Yorkshire also tripled its mortgage lending in 2010 from £936m in 2009 to £2.7bn in 2010.

Kevin Thomson, director of Brilliant Group, says mutuals are well placed to boost lending in 2011.

He says: “It’s encouraging to see that societies such as Leeds have a bigger appetite to lend in 2011. In an ideal world, higher LTVs would be welcomed. But if this means they have to put aside more capital, it will push up rates for first-time buyers.

“To compete with the large banks, societies need to launch innovative products that have different criteria in markets such as buy-to-let.”

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