Leeds Building Society posts record £220m profit after stopping lending to second home buyers

The Society’s analysis of centuries of Bank of England, ONS and Land Registry average earnings and house price data shows that in 1875 house prices as a multiple of average earnings stood at 9.3 and have never reached that level again. But rises in recent years took it to 9.2 in 2022 – the worst position in 147 years.

Chief executive Richard Fearon told The Yorkshire Post: “In 1875, it was £372 for the average house but average earnings were £40.

"It had got more affordable but just in recent years it has become much less affordable and has taken it back to that point of nearly 150 years ago and some pretty difficult times. We were founded when it was phenomenally difficult to get housing and we are dealing with some of the same problems today.”

He added: “That is a pretty sad reflection of decades of inaction to tackle the housing crisis. We’re really keen to play our part in helping first-time buyers in almost unprecedentedly difficult time.”

Mr Fearon said in the economic context, he was particularly pleased with LBS’s annual results as they helped nearly 18,000 first-time buyers onto the property ladder while withdrawing from the second homes market.

LBS saw profits go up 35 per cent to £220.5m – beating the previous record set in 2021 of £163.7m.

Gross mortgage lending was up to £5bn from £4.4bn in the previous year, while the net savings inflow into customer accounts was £2.1bn – more than twice the £1bn recorded in 2021.

Mr Fearon said an investment in new technology which has allowed mortgage applications to move through to an offer “in a matter of seconds” has paid offer – as has the decision to stop lending for the purchase of second homes.

"That meant we could really focus on our purpose which is about putting homeownership within reach. First-time buyer lending is a really key part of what we do. We helped nearly 18,000 onto the ladder. That is about one in three of our loans and our share of the first-time buyer market is about three times our normal market share so we are punching above our weight.”

LBS created more than 200 jobs last year as it invested in bolstering the size and capability of key teams, including its contact centre as well as the IT and underwriting departments.

Mr Fearon said: “We have invested a lot in our mortgage technology and we’re really seeing the benefits of that.

“Our plans really are investing heavily in the future. We created 200 new jobs last year and half were in Yorkshire so it is a real success story in the heart of Leeds.

"We will be investing in technology and improving our systems and growing strongly despite what is a pretty tough economic backdrop.”