Partly Cloudy

Partly Cloudy

max temp: 18°C

min temp: 11°C

ESTD 1874 Search

Update: Ipswich Building Society chief warns of Help to Buy ‘overheating’ risk

16:12 26 February 2014

Ipswich Building Society chief executive  Paul Winter.

Ipswich Building Society chief executive Paul Winter.

Archant

The boss of Ipswich Building Society has warned that the Help to Buy scheme, launched by the Government last year to boost demand for homes, poses a risk of “overheating” in the housing market.

shares

Chief executive Paul Winter sounds the warning in the society’s annual report for the 12 months to November 30, which reveals that its total assets have topped £600million after another year of solid growth.

An increase of 4.3% took the value of the society’s balance sheet to £601m, against £576m at the end of the previous year and £500m in 2010.

Savings balances increased by 4.8%, from £524m to £549m, with mortgage balances rising by a similar margin, from £463m to £485m.

The society’s pre-tax profit grew by 12.5%, from £2.81m to £3.16m, while its administrative expenses ratio − running costs as a proportion of assets − dipped from 1.07 to 1.06.

“2013 has proved to be another successful year with a unique set of challenges,” says Mr Winter in his annual report. “During the year, we had to balance our lending aspirations whilst delivering a major IT change programme.

“We continued to ensure we offered an excellent service to our members, saw retention rates on our products reach 95% and our newest agencies in Mildenhall and Newmarket increase their membership levels.

“We concentrated on prime residential mortage lending using our personal underwriting to meet the needs of a wide range of borrowers and ensure we achieved a reasonable margin to continue to build our capital in the longer term.”

Mr Winter says the society’s lending continued to focus on first-time buyers and those with low deposits, including a 5% deposit mortgage and a “sweat equity” scheme in partnership with Orwell Housing Association under which borrowers can increase their equity stake in a new-build property by completing some of the work themselves.

He adds that, because the society was already lending to people with deposits as low as 5%, it had not needed to join the Government’s Help to Buy scheme, which was announced in last year’s Budget, and he warns that the initiative is not without its risks.

“Superficially, Help to Buy may be a useful tool to increasing home ownership,” he says. “However, during 2013 we saw the housing market begin to revive and it is concerning that the Government quickened its pace of introducing the scheme with the risk of overheating the housing market.”

Mr Winter adds that, towards the end of the year, the society did draw down funds under the Government’s separate Funding for Lending Scheme, which offers cheap funding for lenders, to ensure it remained competitive in the mortgage market, but says that the Bank of England’s subsequent removal of mortgages from the scheme will not compromise the society’s future lending plans.

The annual report also reveals how the society has continued to help local communities, with fundraising during the year totalling £37,500 and staff providing 323 hours of volunteering, alongside its ongoing support for money management skills.

shares

1 comment

  • Agree. This is what I wrote yesterday regarding your article on a big rise in profits for house builders: Good news for the building sector; bad news for the UK. Why? Because the 2008 economic crash (which was VERY CLOSE to a financial meltdown) was based on over-inflated house prices. So what did our 'government' do? It suppressed interest rates to encourage reckless investment in risky assets and introduced schemes such as 'Help to Buy' to bolster house prices. Many reading this, especially first time buyers, may see my words as those of a spoiler ..... but the World trend of rising interest rates has just begun and soon there will be tears over the whole financial sector .... including housing. All bubbles eventually burst.

    Report this comment

    Johnthebap

    Wednesday, February 26, 2014

Ashley Gogan, Bedford Lodge

A four-star hotel in Newmarket has appointed a new face to head up its conference and events service.

Sheepen Place office development scheme at night - artist's impression

Proposals have been submitted for two new office buildings planned for central Colchester.

Greene King chief executive Rooney Anand, left, shaking hands with Mike Tye, chief executive of the Spirit Pub Company, outside Spirit's headquarters in Burton uponTrent following the sale deal.

Jobs are at risk at Greene King following a major acquisition earlier this year.

EDF workers are unhappy over pay.

Hundreds of workers at energy giant EDF are to stage a 24-hour strike in a row over pay.

Amos Smith who is launching a new yoghurt called Mossy's from a secret family recipe.

A popular yogurt made to a secret family recipe has been revived by a young food entrepreneur.

Land next to Burger King is for sale

Tesco, Mothercare and Toys R Us could soon have a new neighbour at Copdock Mill

A city worker looks at a stock ticker screen at the London Stock Exchange in the City of London.

Volatile stock market conditions took their toll again today as the FTSE 100 Index plunged after sharp gains in the previous session.

The Director General of the British Chambers of Commerce, John Longworth, has met with the Suffolk Chamber of Commerce in Ipswich to hear of their work delivering support to firms across the region.

The Director General of the British Chambers of Commerce, John Longworth, met with the Suffolk Chamber of Commerce in Ipswich to hear of their work delivering support to firms across the region last week.

Sainsbury's supermarket was only one of Britain's big four supermarkets to grow sales in the last three months - but still saw its number two spot in the sector retaken by Asda.

Sainsbury’s was the only one of Britain’s big four supermarkets to grow sales in the last three months - but still saw its number two spot in the sector retaken by Asda, according to latest industry data.

Family law expert Georgina Hall, now a partner at Prettys

East Anglia law firm Prettys, which has offices in Ipswich and Chelmsford, has announced the promotion of family law expert Georgina Hall to partner, bringing the total number of partners in the firm to 10.

Most read

Topic pages