Skipton Building Society saw its profits more than double last year amid a recovering economy and an “incredibly hot” housing market.
Britain’s fourth-largest mutual with around 100 branches across the country recorded a 129 per cent rise in pre-tax profit to £272m last year, from £119m in 2020.
The group, which also owns Connells estate agents, hailed “record” mortgage lending, including to first-time buyers, totaling £5.4billion.
Skipton said he was buoyed by a recovering economy and rising mortgage lending
He said the record performance was due to a strong housing market supported by low interest rates, the suspension of stamp duties and competitive mortgage deals – although he expects activity to slow this year.
Skipton has “end-to-end” reach of the housing market – he sells houses through Connells, then lends people money to buy them.
Home sales at its expanded Connells business, which completed the acquisition of struggling rival Countrywide last year, have jumped 175% from 2020, or 50% if newly-minted agents are excluded. acquired.
Connell’s pre-tax profit also more than doubled to £111m, from £52m in 2020, but the mutual has warned a shortage of housing in the market remains a problem for the industry.
Rising home sales helped push up lending across the building society.
Skipton issued some 30,282 mortgages last year, an increase of almost a quarter on 2020, including almost 7,900 to first-time buyers, an increase of 45%.
Mortgage arrears continue to be low, Skipton said, and he now has a mortgage portfolio of more than £23billion.
Skipton warned real estate activity will likely slow this year
On the savings side, the mutual said it continued to attract new customers with its “well ahead of the market” rates – with its savings balances jumping from over £1billion to £19.8 billion.
Despite the low interest rate environment, Skipton in 2021 paid an average savings rate of 0.65% to savers, 0.4% above the market average, he added. .
It attracted nearly 22,000 new customers in 2021 and now has more than a billion members.
Chief executive David Cutter said 2021 was a “remarkable” year for the mutual, leaving it to face 2022 “from a position of great strength”.
“Today’s results show a significant improvement on 12 months ago, when despite posting strong earnings, our results were a clear indication of the difficult times the UK faced in the midst of a global pandemic,” he said.
However, he predicted further pressure on margins as he expects stiff competition in the mortgage market to remain, despite further interest rate hikes on the horizon.
Cutter also warned that real estate activity will likely slow this year, but first-time buyers will continue to struggle to climb the real estate ladder.
‘The housing market is likely to moderate in 2022, and with Skipton’s end-to-end view of this market, thanks to the company having the largest network of estate agents in the UK, it plans to do more to help people get the keys to their first home,” he added.