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Society mortgage advances rise 68%

Mortgage advances rose more than 68 per cent at Hinckley & Rugby Building Society in the first half of its financial year, to the end of May 2012.

Advances were £46.2 million in the six months from December to May, up 68.6 per cent on the £27.4 million advanced in the same period a year before.
The half-year results announced today [June 22] put the top 20 society on track for a full-year mortgage advance total of £92.4 million, up on the previous year’s £76.8 million.

The first half saw 2.2 per cent growth in Hinckley & Rugby’s mortgage book, to £433 million. That trend is expected to continue, with the full year to the end of November 2012 forecast to see 4.0 per cent growth, to £440 million.

Chief executive Chris White said the half-year saw a retreat from the mortgage market by some of the big banks, which led to “unprecedented demand and a shock to the system” in March and April as more customers turned to building societies.

The Society remains a cautious lender, with its high quality loan book meaning arrears continue to be almost non-existent. More first time buyers are being helped by Hinckley & Rugby, with lending at up to 90 per cent LTV (Loan to Value). A five-year fix is currently proving attractive.

On the savings side, more than 4,000 savings accounts were opened in the first half. Particularly attractive to savers were fixed rate bonds and the 1 Year Premium Access Bond. This bond allows one penalty-free withdrawal if a saver unexpectedly needs to access their money.

New savers are joining the Society directly at branches, online and by post, and also through the online savings platform Governor (www.governormoney.com) that enables savers to manage all their accounts in one place.

In the half-year the Society entered the corporate saving arena, with its Business 30 deposit account paying 2.0 per cent interest to companies in the Society’s heartlands. More than £4 million has flowed into the Society from businesses keen to maximise the return on their reserves rather than receive next to nothing from banks.

At the end of May liquidity was a very healthy 24 per cent of shares and deposits, down from almost 28 per cent in May 2011 – reflecting the increased mortgage demand as the Society continues its return to significant new lending.

Chris White said the Society is attracting funds from sources away from the retail money market, including from local authorities. “And Hinckley & Rugby has no exposure to the Euro zone,” said Chris, “so our savers can be reassured their money is safe with us.”

With a tight rein on costs meaning administrative expenses remain flat, Hinckley & Rugby continues to be profitable.

Chris White said: “Whilst the low base rate continues to constrain the room for manoeuvre for all building societies, Hinckley & Rugby is performing well as we step up the gears of more lending. Our customers, new and existing, remain highly satisfied with our commitment to exceptional service.”

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