Loughborough Building Society raises lending by 12% to help first-time buyers
Loughborough Building Society has increased mortgage lending by 12 per cent as it looks to help first-time buyers get on the housing ladder.
It comes after the society recently started offering a 95 per cent home loan for the first time since the credit crunch of five years ago.
Chief executive Gary Brebner said: "We have done it to see if we can help first-time buyers."
The credit crisis left young people out in the cold as mortgage providers demanded 20 per cent and even 30 per cent deposits.
However, a revival in the housing market is encouraging many lenders, such as the Loughborough, to embrace this sector of the market again.
"This is a deliberate policy of trying to lend more in what is a flat market," said Mr Brebner. "We are trying higher loan to value loans."
He said the Loughborough had offered a 90 per cent mortgage for some time. The 95 per cent product is fixed at 4.99 per cent for five years and has an arrangement fee of £99. It is only available to people living in the East Midlands.
The society said it approved £29.4 million of mortgages in the year to October 31. Over the same period it increased net mortgage lending – which takes account of repayments by existing mortgage-holders – by 2.5 per cent to £203.8 million.
Pre-tax profit for the period was £616,000, but this does not include a £111,000 levy it must pay under the controversial Financial Services Compensation Scheme. Last year pre-tax profit before the compensation scheme levy was £751,000.
Overall assets were up by 2 per cent to £275.7 million.
Mr Brebner said there were no plans to follow Shepshed Building Society and merge with a larger rival. The Shepshed announced a tie-up with Nottingham Building Society last year. It means the number of Leicestershire-based building societies – the highest in any UK county – will fall from six to five.
Mr Brebner said he was focused on increasing the society's presence in the region, and was looking at expanding into north west Leicestershire.
The 143-year-old Loughborough has 29,500 members. Based in the town, it has branches in Derby and Long Eaton, and agencies in Clarendon Park, Leicester and the Nottinghamshire towns of Southwell and West Bridgford, which opened last year. It employs 47 staff.