Skipton BS boss says mutual will give free financial advice and issue a new mortgage for first-time buyers

Next month the Skipton Building Society will celebrate its 170th anniversary.

As the UK’s fourth largest mutual, with 1.14 million savers and mortgagors, it has proven it can stand the test of time.

But according to its new chief executive, Stuart Haire, now is not the time to look back, but forward.

Haire joined Skipton earlier this year having previously been Head of Wealth and Personal Banking at HSBC. He says he’s enjoying the move from bank to building society.

“It’s a privilege to lead a company with a proven track record,” says Haire. ‘As Skipton’s new Group Chief Executive, the appeal of this position was the opportunity to leverage Skipton’s group structure, unique business mix and mutual status to support our members now and into the future.

“Unlike the big banks, we don’t have to make wealthy shareholders even richer by giving away profits as dividends.

“We keep the members’ money. If we can’t spend it, we give it back to our members in the form of better savings rates.

“Obviously it’s important that we don’t lose money, but as a mutual we have to at least break even.”

Skipton has certainly done much better than breakeven in recent years. Profit more than doubled in 2022, with pre-tax profit up 129 per cent to £272m compared to £119m in 2020. Last year membership also grew by almost 55,000.

Her savings rose a record 13.6 percent to £22.5 billion thanks to the Bank of England’s increase in the base rate.

It claims that in 2022 it has typically paid interest rates 0.52 percentage points above the market average, putting an extra £104.7m in members’ pockets.

Mortgage lending also boomed last year. Its loan book grew 9.6 per cent to over £25.5 billion, with net lending accounting for 3.6 per cent of growth in the UK residential mortgage market, compared to Skipton’s overall share of 1.5 per cent.

We sat down with Stuart Haire to discuss Skipton’s plans for the future.

What is Skipton planning for its customers in 2023?

Free financial advice

Skipton BS aims to provide free financial advice to all of its members, or at least to those who wish to.

That’s a bold claim, but one that’s entirely possible given that a financial advisor is available in each of its 87 branches.

The free service involves a general sit down to review a person’s financial situation, such as how much debt they have, how much they’ve saved for a bad day, and how much of their Isa grant they’ve used up.

For those with more complex needs, it is also possible to have a full financial audit with a professional financial advisor – also free of charge.

This is a service that Haire believes will set it apart from its competitors.

“I don’t think it’s fair how the financial advice market has developed,” he says. “Typically, the richest with the greatest wealth complexity can get a financial advisor because they can afford it.

“Meanwhile, everyone else does not receive financial advice and is therefore not well prepared for their future.

“If you look at the other building societies, they don’t usually have a financial advice department.

“And if you look at the big banks like HSBC, they’re only interested in the wealthiest customer base.

“We want to offer free financial advice to every member. Over 1.1 million people can get free financial advice. You won’t get that anywhere else.”

green houses

Many people will already be aware of growing concerns about the energy efficiency of the UK’s aging housing stock – a problem that has become more pressing in recent years thanks to rising bills.

Around 60 per cent of all homes in England and Wales have an energy efficiency rating of D or worse, with the Government aiming to bring as many homes as possible to at least an EPC of C by 2035.

Landlords are under more pressure as the government proposes that every new rental should have a minimum EPC of C by 2028 – although this is not yet enshrined in law.

The EPC is a rating scheme that ranks properties between A and G, with an A rating being the most energy efficient and G being the least efficient.

EPC ratings used to be an afterthought but are now becoming an increasingly important consideration when buying property.

This is partly due to higher energy bills, but in some cases EPC ratings are affecting mortgage rates and whether some banks will lend at all. The government has already considered requiring banks to report the percentage of homes they lent with an EPC rating of less than C.

“Most people are concerned about the energy efficiency of their homes,” says Haire. “They worry about it while they’re in them, but they also worry about it when they’re selling or buying.

“That’s because they ultimately know that not only will this be a cash flow drain in the form of higher bills, but it could end up being worth less than an energy efficient home.”

In partnership with Vibrant Energy, owned by the Skipton Group, Skipton offers all of its members a free Home Energy Efficiency Report (aka EPC Plus) to help them identify ways to increase energy efficiency and reduce of the carbon footprint of their homes.

It has also made this offer available to its buy-to-let customers. Landlords can have up to 10 properties rated to help them on their journey to greening their portfolios – even if just one of their properties is polluted by Skipton.

“It basically means having an appraiser visit your home,” says Haire. “They give you the EPC rating of your property, but also suggest practical steps you can then take to improve your home’s energy efficiency.”

More first-time buyers

First-time buyers across the UK fell last year compared to record highs in 2021, with demand dampened in recent months by rising mortgage rates.

For its part, Skipton gave mortgages to 13,800 first-time buyers last year.

With interest rates rising and housing affordability tougher than ever, Haire plans to continue trying to support first-time buyers up the ladder.

He says early signs are that property viewings are picking up and interest in home buying is returning. This coincides with mortgage rates stabilizing between 4 and 5 percent for the majority of borrowers, compared to their peaks of over 6 percent in late 2022.

Skipton says it will launch a new mortgage product for first-time buyers later in the year, although it hasn’t said exactly what that will be.

Haire’s personal views could suggest a mortgage product aimed at helping first-time buyers who may be short of a security deposit.

“I don’t like the idea of ​​everyone having to put down a huge deposit to buy a property,” he says.

“There are many aspiring first-time buyers who can afford the mortgage but haven’t been able to save the deposit because their income is being used to pay rent. Not everyone has mom and dad [that can help].

“We can provide first-time buyers with products that some of the more established lenders might have difficulty lending to.”