Skipton Building Society passes on base rate increases to savers while protecting variable rate borrowers

Skipton Building Society said it passed on the benefit of base rate increases to savers while protecting variable rate borrowers, as the mutual reported generally flat pre-tax profits for the first half of the year.

The mutual generated pre-tax profits for the period of £160m for the first six months of the year, up from £159.2m the previous year.

Skipton saw record mortgage applications with May 2022 being the society's highest ever month for mortgage applications, totalling £1.1bn. Its mortgage portfolio grew 3.1 per cent in the period to reach £24bn.

The Bank of England increased the bank base rate four times in the period, from 0.25 per cent at the start of the year to 1.25 per cent by June.

Skipton saw record mortgage applications in the first half of the year.

However, the society says that given the immediate cost of living crisis for households, it took the decision to protect its mortgage variable rate borrowers from these base rate increases with only 0.1 per cent of the total 1 per cent increase being passed on to its variable rate borrowers.

For savers, Skipton increased the rate of interest paid on all variable rate savings accounts and now pays a minimum rate of 0.85 per cent on all variable rate savings accounts, up from 0.15 per cent on December 31, 2021.

Ian Cornelius, Skipton's interim chief executive, said: "I'm acutely conscious our strong performance comes at a time when household finances are under significant strain. The current economic environment for our members and colleagues is understandably causing concern.

“Our role at Skipton is to help people navigate these challenging times, and it's very pleasing to see our competitive offering and first-rate service have enabled us in recent months to help more people than ever before.

“As a mutual, we're accountable to our members, not shareholders. Our priority will always be the long-term sustainability of our business, not short-term profit maximisation. So it is a relatively straightforward decision that we take to reinvest profits into the business for the benefit of everyone - our customers, our colleagues and our communities.

“We seek to invest purposefully, from strengthening our IT, digital and data platforms, through to reimagining how we attract and retain talent, to ensure we are fit for the future. And that goes for our green ambitions too, with increased investment to deliver our transition to net zero and support our customers to live in greener and more efficient homes.

“These results for the first half of 2022, including the excellent growth achieved in both mortgages and savings, are the result of the great work by colleagues across the society and their unwavering focus on helping our members at every life stage by offering great value, great service and a strong proposition that meets their needs.

“Public and personal finances have rarely been under such pressure as they are today. Whilst faced with significant uncertainties, Skipton is in a robust position to meet the challenges ahead.

“The trust our customers and colleagues place in us to do the right thing by them will never be taken for granted. We will continue to do everything we can to support them and their families in these extraordinary times."