Record mortgage lending and resilient performance for Newcastle Building Society in full-year results

The North East’s largest building society is well placed to support the economic recovery after providing a record number of mortgages in the second half of 2020.

Announcing its full-year results, Newcastle Building Society said that while 2020 had posed many challenges, the fundamental core of the business remained resilient.

In fact, operating profit was actually slightly higher year-on-year at £16.4 million, compared to £16.3 million in 2019.

Gross mortgage lending for 2020 was also strong, up to £645 million from £575 million in 2019 and driven by a surge in demand towards the second half of the year.

Speaking to North East Times, chief executive Andrew Haigh said the increase in mortgage lending had been “very much demand led”.

“The market has been very active, and we were pleased to be able to provide mortgages and help people through this time,” he said.

Newcastle Building Society has been able to keep its extensive network of high street banks open throughout the coronavirus pandemic, taking on 13,000 new savings customers in the last year and growing its savings balances by £376 million (11 per cent).

To support those who have been adversely financially impacted by COVID-19, the mutual has also donated £1.5 million to a number of community causes, notably the £1.1 million partnership with Newcastle United Foundation, and supported 4500 mortgage customers with payment holidays.

These charitable endeavours combined with extensive investment in business continuity for saw pre-tax profits fall to £2 million from £14.7 million in 2019.

Andrew added: “It is encouraging to be able to report that even with the many challenges of the last 12 months and the increased non-recurring costs associated with COVID-19, our operating profit was slightly higher than the previous year.”

Following the Chancellor’s Budget on Wednesday (March 3), Newcastle Building Society welcomes the extension of the stamp duty holiday through until June, with properties under £250,000 benefitting from the nil rate until September.

The company has also been encouraged by the announcement of a new Government-backed mortgage guarantee to increase the number of 95 per cent loan-to-value mortgages available to people with smaller deposits.

Andrew said: “We expect to be able to offer these Government-backed mortgages, we just need to see a bit more of the detail.

“We are very supportive of anything to help young people get on the property ladder because we do know how hard it is to save and to build up a deposit.”

On the outlook for the society in 2021, he said: “There’s a lot to be positive about.

“We’ve shown over the last 12 months that the business is resilient and has continued to grow and invest through this period.

“Undoubtedly, these are difficult times for the economy, but we believe we’re well placed to respond.”