The mutual reports pre-tax profit down 10.7% to £14.2m in the period to the end of June compared to a year ago, while gross mortgage lending fell 7.2% to £448m.
“The first half of 2022 has seen the external environment continue to be unpredictable and increasingly challenging, with the pandemic still evident in our way of life, we now are facing unprecedented high inflation and a potential cost of living crisis,” says Newcastle Building Society chief executive Andrew Haigh in a statement to the London Stock Exchange.
He adds: “The high inflationary pressures that are being felt in our own households are also impacting our day-to-day business operations, which together with our ongoing programme of investment into technology and infrastructure, have seen our costs increase across our business activities.”
The firm’s results come after the ONS said that inflation hit 9.4% in June, setting a fresh 40-year record high, driven by rising fuel and food prices. The Bank of England has raised interest rates five times in a row since December from a historic low of 0.1% to a 13-year high of 1.25%.
The mutual says it continues to support first-time buyers through two schemes – Deposit Unlock and First Homes.
It says Deposit Unlock is a new-build mortgage product that provides an option for those with smaller deposits, which it helped design along with 21 national developers.
The building society says: “73% of applications under Deposit Unlock have been from FTBs, which shows that the initiative is helping in exactly the way it was designed and we expect interest in the scheme to continue to grow, especially when [the government’s] Help to Buy[programme] comes to an end.”
It also supports the government-backed First Homes scheme, aimed at getting local people and key workers onto the property ladder in their areas by offering homes at a discount of at least 30% compared to the market price.
The business says: “We continue to provide our full support to the scheme, having funded more than one third of national completions in the first half of 2022.”
The firm said its mortgage arrears remained low at 0.38% of mortgages in arrears by three months or more, compared to 0.42% at the end of its full year. Its common equity tier 1 ratio was at 13.3%, unchanged from its full year.
Haigh adds: “The society’s strength is in our purpose-led strategic approach, is more relevant than ever to our customers and communities as we face ongoing challenges. That means maintaining a fair balance between savings and mortgage rates, while continuing to do all we can to help FTBs and support those looking to save and plan their finances.”
