Mortgage specialist Bradford & Bingley sounded an upbeat note about the buy-to-let market today as annual profits hit the top end of expectations.
Although B&B said the growth in its most important market was moderating, it continued to grow “considerably” faster than the wider mortgage market.
It came as the company, based in Bingley, West Yorkshire, revealed that pretax profits before exceptionals rose by 6% to £280.2m in the year to December 31.
The results follow recent data from the Council of Mortgage Lenders showing the number of people buying properties to rent out fell by 18% in the second half of last year, compared with the first half.
B&B said today that buy-to-let had become an important UK sector, which accounted for 6% of outstanding mortgage balances. The company has a 22% share of this market.
It said: “While the rate of growth in buy-to-let is moderating, it continues to grow at a rate considerably above that of the whole mortgage market and is supported by strong underlying demographic, social and economic factors.”
The group said growth in the wider housing market was slowing from the “unusually” high rates seen in the last few years.
But it added: “We have not been surprised by the deceleration from the unsustainable levels of growth seen in the recent past.”
B&B said a continued strong performance by its key lending and high street businesses drove its growth during a transitional year in which it disposed of non-core operations.
It sold five businesses, including its Charcol mortgage broking business. This contributed to bottom line profits falling to £105.3m from £264m. B&B said this restructuring was now complete.
The group also started a cost reduction programme last year aimed at removing £40m of costs from the business over an 18-month period.
Looking ahead, it said it expected good growth and attractive margins to continue in its chosen lending markets.
The total dividend was raised by 4% to 17.1p.
References: EGi News 22/02/05
