Skipton Building Society will celebrate its 170th anniversary next month.
As Britain’s fourth largest mutual with 1.14 million savers and mortgage borrowers, it has proven it can stand the test of time.
But according to the new CEO, Stuart Haire, now is not the time to look back, but forward.
Haire joined Skipton at the start of the year, having previously been Head of Wealth and Personal Banking at HSBC. He says he enjoys switching from bank to building society.
Stuart Haire, the new CEO of Skipton BS, joined from HSBC and says without rewarding shareholders he wants to ‘give back’ to members of the construction company
“It’s a privilege to lead a proven, purpose-driven company,” says Haire. “As Skipton’s new Group Chief Executive, the appeal of this role was the opportunity to leverage Skipton’s group structure, unique business mix and mutual status to support our members now and in the future.
‘Unlike the big banks, we don’t have to make rich shareholders even richer by giving away profits as dividends.
“We hold onto members’ money. If we can’t spend it, we give it back to our members in the form of better savings rates.
‘Of course it is important that we do not lose money, but as a mutual understanding we must at least break even.’
Skipton has certainly done much better than break even in recent years. It saw profits more than double in 2022, with a 129 per cent increase in pre-tax profits to £272m, up from £119m in 2020. Last year it also saw its membership grow by nearly 55,000.
His savings rose by a record 13.6 per cent to £22.5 billion, thanks to increases in the Bank of England’s key interest rate.
It claims it typically paid interest rates that were 0.52 percentage points above the market average in 2022, meaning an additional £104.7 million in members’ pockets.
Mortgage lending also boomed last year. The loan book increased by 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 spoke to Stuart Haire to discuss Skipton’s plans for the future.
Skipton says it has a financial advisor available in every branch – and members can get free advice
What does Skipton plan to do for customers in 2023?
Free financial advice
Skipton BS wants to provide free financial advice to all its members – or at least those who want it.
It’s a bold claim, but one that might be possible given that it has a financial advisor available in each of its 87 branches.
The free service includes a general meeting to review someone’s financial situation, such as how much debt they have, how much they’ve saved for a rainy day, and how much of their Isa benefit they’re using.
For those with more complex needs, it is also possible to get a full financial audit with a professional financial advisor – also for free.
This is a service that Haire believes sets itself apart from its competitors.
“I don’t think it’s fair how the market has evolved around financial advice,” he says. “Typically, those who are the wealthiest, with the greatest asset complexity, can get a financial advisor because they can afford it.
‘Meanwhile, everyone else is not receiving the financial advice and is therefore not well prepared for their future.
‘If you look at the other building societies, they usually don’t have financial advice departments.
‘And if you look at the big banks like HSBC, they are only interested in the most wealthy clients.
‘We want to provide free financial advice to everyone who is a member. So more than 1.1 million people can get free financial advice. You don’t get that anywhere else.’
Green homes
Many people will already be aware of growing concerns about the energy efficiency of the UK’s aging housing stock – an issue 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 performance rating of D or worse, with the government keen to get as many homes as possible at least an EPC of C by 2035.
Around 60% of all homes in England and Wales have an energy performance rating of D or worse, and this is becoming a concern for some when selling and buying property
Landlords are under more pressure, with the government proposing that any new rental must have a minimum EPC of C by 2028 – although this is not yet legislated.
The EPC is a classification scheme that classifies 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 real estate.
This is partly due to higher utility bills, but in some cases EPC ratings affect mortgage rates and whether some banks even lend. The government has previously considered having banks report on the share of homes they lend with an EPC rating lower than C.
“Most people are concerned about the energy efficiency of their home,” says Haire. “They worry about it when they’re in it, but they also worry about it when they sell or buy.
“This is because, ultimately, they know that not only will it be a cash flow burden in terms of higher bills, but it will ultimately be worth less than an energy-efficient home.”
Skipton says it will send surveyors to its customers’ homes free of charge to give them a report on how to make them more energy efficient
In partnership with Vibrant Energy, which is owned by the Skipton group, Skipton offers all of its members what it calls a free Home Energy Efficiency Report (also known as an EPC Plus), which helps them find ways to increase energy efficiency and reduce the carbon footprint of their homes.
It has also made this offering available to its buy-to-let customers. Landlords can have up to ten properties appraised to support them on their journey to green their portfolios – even if only one of their properties is mortgaged through Skipton.
“This basically involves having a surveyor visit your home,” says Haire. ‘They give you the EPC score of your home, but also suggest practical steps you can take to improve the energy efficiency of your home.’
More starters
The number of first-time buyers in the UK fell last year compared to the record highs of 2021, with demand slowing in recent months due to rising mortgage rates.
Skipton, for its part, lent mortgages to 13,800 first-time buyers last year.
With interest rates rising and housing affordability more challenging than ever, Haire says he wants to keep trying to help first-time buyers up the ladder.
He says early indications suggest property viewings are increasing and interest in buying homes is returning. This coincides with a stabilization in mortgage rates for most borrowers between 4 and 5 percent, compared to their peaks of more than 6 percent at the end of 2022.
Skipton says it will launch a new mortgage product for first-time buyers later this year, although it has been tight-lipped about exactly what that will be.
Helping hand: In 2022, Skipton supported more than 13,800 first-time buyers who received the keys to their first home.
Haire’s personal views could suggest a mortgage product designed to help first-time buyers who may not have a down payment.
“I don’t like the idea that everyone has to put down a huge down payment to buy a home,” he says.
‘There are many aspiring starters who can pay the mortgage, but have not been able to save the deposit because their income goes to rent. Not everyone has a mom and dad [that can help].
“We can make products available to new buyers that some mainstream lenders might struggle to lend money to.”
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