The UK’s second-largest building society says mortgage balances lifted by 7.2% to £3.1bn, with the number of FTBs growing to 7,100 as the market surged as a result of the stamp duty holiday.

The firm says profit was also boosted by the release of £29m of pandemic-related provisions it held to cover potential future credit losses.

Its net interest margin rose to 0.90% from 0.81% in 2020, while the mutual’s Common Equity Tier 1 ratio remains well above statutory requirements at 36.2%.

The firm says: “A combination of FTBs and home workers looking for larger properties as part of the ‘race for space’ helped Coventry Building Society grow significantly above the level of the market in 2021.”

It adds its savings balances grew by 4.6% to £39.9bn, with an average savings rate of 0.83%, the equivalent of an additional £201m of interest for savers.

Coventry Building Society chief executive Steve Hughes says: “The pandemic changed the way many people want to live and work, creating greater demand for homes with more indoor and outdoor space, and a surge in the number of people taking their first step on the property ladder.

“The demand from FTBs was particularly strong and we ramped up our support for this critical part of the property market with a greater range of products to help people save for and buy their first home.

“Combined with the stamp duty holiday, this created a buoyant and extremely busy mortgage market in 2021.

“In contrast to the first half of 2021 we took decisions to slow growth in the latter months of the year in the face of an increasingly competitive market and the sharp contraction of margins – a clear example of our long-term perspective and member-focused purpose.

“We have shown, despite the challenges of the pandemic, that we can meet the needs of today’s members whilst laying the foundations for the future and, as we move on from the challenges of the pandemic, I am very confident about the year ahead.”