Mortgages 

Leeds's mortgage slowdown 'part of plan'

Leeds's mortgage slowdown 'part of plan'

The chief executive of Leeds Building Society has said its slowdown in mortgage lending was expected and represented a return to normal levels.

Peter Hill said the building society had seen several years of strong growth and the fall in residential mortgage lending in the first half of 2018, to £1.8bn from £2.1bn, was merely a "normalisation".

He said: "Since 2007 we have been the fasted growing building society and the intention always was that after that growth period we would slow down to a single digit level.

"So this is probably more of a normalisation in terms of our growth rate. It is a very sustainable level of growth."

Leeds Building Society also saw its net interest margin - the difference between the interest generated from mortgages to that paid out on deposits - fall, as competition intensified across the mortgage market.

Mr Hill said: "The direction of travel for net interest margins has been in line with our expectations. It is coming into a range now which is still very sustainable for us.

"We have been planning for a more competitive market for a long time, which is why our approach to the mortgage market has changed."

Mr Hill said the building society had a strategy of competing by focusing on niches in the mortgage market, such as shared ownership and holiday buy-to-let.

He said it was in this spirit that Leeds Building Society launched a retirement interest only mortgage earlier this week.

Mr Hill said: "We are much less reliant on the mainstream, vanilla market which is tremendously competitive. The market has very strong players who are very good at what they do."

He added that Leeds was working on the basis this competition would continue for the foreseeable future.

In the building society's half-year results this morning, it announced that Mr Hill would step down in February 2019 and hand over to Richard Fearon, who is currently chief commercial officer.

According to its latest results, the society posted a £60.1m profit before tax, down 5 per cent because of a one-off charge of £6.9m resulting from its decision to dispose of its Irish mortgages.

damian.fantato@ft.com