Lloyds cashes in on mini housing boom

LLOYDS Bank has roared back to profit after a housing market boom pushed demand for mortgages to its highest level since the financial crisis.

Britain’s biggest mortgage lender pulled in pre-tax profits of £1bn for the three months to September, racing past City expectations of £588m.

Chief executive Antonio horta- Osorio said pent-up demand, the Government’s stamp duty holiday and a desire to move out of the city during lockdown had fuelled a surge in house sales.

Lloyds’s mortgage lending increased by £3.5bn over the three-month period, and it processed the highest number of applications since 2008. The Bank of England, meanwhile, said overall mortgage approvals hit 91,500 in September, the highest level in 13 years. horta-Osorio said: ‘The housing market is significantly stronger than what everyone would have anticipated six months ago, which is quite interesting. On one hand you have strong first-time buyer demand, and on the other hand you also have very strong home-mover demand.’

he said many have revaluated where they live during lockdown after spending so long cooped up indoors.

‘There is also another important part – people have been saving through the pandemic given that they spent less on travel and hospitality, and most people spend much more time at home so they want to live in bigger homes preferably outside cities,’ he said. Following the recent boom in demand, Lloyds predicted house prices will rise 2pc this year – up from the 6pc fall it was predicting halfway through the year.

But the lender expects prices to fall 4pc next year, partly due to the end of the stamp duty holiday on March 31 and wider concerns about the health of the economy.

Lloyds, which has roughly a 19pc share of the UK mortgage market, is more dependent on the economy than many of its rivals as it is focused on the domestic market and does not have a major investment bank.

But like its peers, Lloyds has been setting aside money to cover loans expected to turn sour due to the pandemic.

It saved £301m in the three months to September, taking the total for the year so far to £4.1bn. But Lloyds emphasised there was still great uncertainty, and the economic outlook would likely deteriorate if the UK does not reach a post Brexit trade deal with the EU by the end of the year. Lloyds’s generally optimistic tone did raise hopes that it might resume its dividend for the full year.

But horta-Osorio was cautious, saying it would be a decision for the lender’s board.

In contrast hSBC, announced earlier this week it was hoping to resume paying dividends at the end of the year. But it drew anger when it announced it was considering charging for basic banking services, like current accounts, to bring in more money.

Lloyds did not rule out introducing charges, but for now horta- Osorio said: ‘Our position in the way that we provide current accounts and services to customers is absolutely unchanged.’