Skipton Building Society profit more than doubles to £272m amid ‘incredibly hot’ property market and rebounding economy
- Britain’s fourth largest mutual saw pre-tax profit for 2021 rise 129% to £272m
- Its estate agents Connells saw house sales surge 50%, which boosted lending
- Skipton handed out 23% more mortgages than in 2020; first-time loans up 45%
Skipton Building Society saw profit more than double last year amid a rebounding economy and an ‘incredibly hot’ housing market.
Britain’s fourth largest mutual with around 100 branches across the country posted a 129 per cent increase in pre-tax profit to a £272million last year, up from £119million in 2020.
The group, which also owns estate agents Connells, hailed ‘record’ mortgage lending, including to first-time buyers, for a total of £5.4billion.
Skipton said it was buoyed by a rebounding economy and rise in mortgage lending
It said the record performance was driven by a strong housing market supported by low interest rates, the stamp duty holiday and competitive mortgage deals – although it predicts activity will slow down this year.
Skipton has an ‘end-to-end’ reach of the housing market – it sells homes through Connells and then lends people money to buy them.
House sales at its enlarged Connells business, which completed the acquisition of struggling rival Countrywide last year, jumped 175 per cent compared to 2020, or 50 per cent if excluding the newly acquired agents.
Connells pre-tax profit also more than doubled to £111million, from £52million in 2020, but the mutual warned that a shortage of homes coming onto the market remained an industry issue.
The rise in house sales helped push lending higher across the building society.
Skipton handed out some 30,282 mortgages last year, an increase of almost a quarter on 2020, including nearly 7,900 to first-time buyers, which is an increase of 45 per cent.
Mortgage arrears continue to be low, Skipton said, and it now has a mortgage portfolio of over £23billion.
Skipton warned that housing activity will likely slow down this year
On the savings side, the mutual said it continued to attract new customers with its ‘well ahead of market’ rates – with its savings balances jumping by over £1billion to £19.8billion.
Despite the low interest rate environment, in 2021 Skipton paid an average savings rate of 0.65 per cent to savers, which is 0.4 per cent above the market average, it added.
It attracted nearly 22,000 new customers in 2021 and it now counts over one 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 present a significant improvement from 12 months ago, when despite reporting good profits, our results were a clear indication of the challenging times the UK faced in the midst of a global pandemic,’ he said.
However, he predicted further pressure on margins as he expects strong competition in the mortgage market to remain, despite further interest rate rises on the horizon.
Cutter also warned that housing activity will likely slow down this year, but first-time buyers will continue to find it difficult to get on the property ladder.
‘The housing market will likely moderate during 2022, and with Skipton’s end-to-end view of this market, thanks to the Society owning the UK’s largest estate agency network, it plans to do more to help people get the keys to their first home’ he added.