Rain

Rain

max temp: 12°C

min temp: 8°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

Ipswich Crown Court

A 19-year old man who met up with a 13-year-old girl and exchanged text messages with her despite being given a police caution for kissing her several months earlier has been sentenced to 21 months youth detention.

The vandals tore through Bury St Edmunds

A drunken “night of madness” saw vandals rack up over £5,000 of damage to cars, pubs and property as they roamed the streets of Bury St Edmunds.

St Edmundsbury Cathedral overlooking colourful displays in the Abbey Gardens

Suffolk’s most important religious building has been awarded a £300,000 Government grant to pay for urgent roof repairs.

Josephine Murphy

An 86-year-old woman who had gone missing from Clacton has been found safe and well

Aftermath of a barn fire in Holton.

A television antiques expert has appealed for help rebuilding his eco-friendly arts centre in Suffolk after a major blaze destroyed the historic sawmill that was to be its showroom and workshops.

Darsham Nurseries head chef Lola DeMille and chef Tom Eagle in the cafe where they are donating money from one of the dishes to the World Land Trust.

An international conservation charity based in Suffolk is one of three organisations to benefit from a new campaign raising awareness about the impact of meat production on health, welfare and the environment.

Suffolk County Council's base at Endeavour House

Up to 23 jobs could go in a major shake-up of Suffolk County Council’s education services.

Latitude Festival, at the Henham Estate near Southwold

Suffolk poet Luke Wright has seen the Latitude festival grow from a modest boutique gathering in 2006 to one of Britain’s biggest music and arts events.

Fire crews

Firefighters tackled a lorry fire in Ipswich last night, after police reported the vehicle in Hatfield Road.

Last year's Colchester Half Marathon.

Thousands of people will be pounding the streets of Colchester tomorrow as the town’s half marathon event returns.

Most read

Most commented

Topic pages