Skipton hits first-time buyer target four years early as profits fall—can mutuals sustain the housing market burden?
Skipton Building Society helped 26,000 first-time buyers onto the property ladder in 2024, smashing a target it had originally set for 2028. The milestone sounds like cause for celebration, except it arrives alongside falling profits and an uncomfortable reality: mutuals are propping up an increasingly broken housing market, and the numbers suggest this cannot continue indefinitely.
The group's pre-tax profits dropped to £275.2 million last year, down from 2024's figure, whilst its mortgage book grew 7.9 per cent to just over £33 billion. That growth rate represents a notable slowdown. More striking still, first-time buyers now account for exactly half of Skipton's new mortgage lending—an unusually high concentration that raises immediate questions about portfolio risk and long-term sustainability.
The mutual advantage—and its limits
Building societies occupy a peculiar position in British finance. Unlike banks answerable to shareholders demanding quarterly returns, mutuals exist to serve their members. That structural difference allows them to take strategic bets that high-street banks increasingly avoid, particularly in the first-time buyer market where loan-to-income ratios stretch ever higher and deposits remain stubbornly out of reach for millions.
Skipton's approach has been notably creative. Its Track Record Mortgage, launched in recent years, allows borrowers with consistent rental payment histories but minimal deposits to qualify for home loans. For renters who've spent years paying landlord mortgages whilst struggling to save their own deposits, it represents a rare route onto the ladder. The product also represents higher-risk lending, accepting applicants who cannot meet traditional deposit requirements in a market where house prices continue to outpace wage growth.
What's interesting here is the scale. A typical mortgage lender might see first-time buyers represent 30 to 35 per cent of their book. Skipton's 50 per cent concentration doubles down on the riskiest segment of the market—younger borrowers with smaller deposits, higher loan-to-value ratios, and less equity cushion if property values decline. The mutual has essentially built a business model around absorbing risk that commercial banks have deliberately shed.
Five million stuck at home
The context makes Skipton's strategy comprehensible, if not entirely comfortable. According to the society's own research, five million adults in the UK remain living with parents because they cannot afford independent housing. Housing affordability, measured by Skipton's own index, sits at its lowest point in 17 years. The society's figures place average house prices at more than nine times average earnings in many regions, with London and the South East pushing past twelve times in some areas.
Those numbers explain why Skipton's membership has grown to 1.32 million, with total savings held surging past £30 billion for the first time. Savers received more than £195 million through above-market interest rates on accounts, a competitive position that allows the mutual to fund its mortgage lending whilst banks cut savings rates at every opportunity. The society operates a relatively straightforward model: attract savers with better rates, deploy that capital into higher-risk first-time buyer mortgages that banks won't touch, and accept lower profit margins in service of the mutual's social mission.
The tension, though, is obvious. Profits are falling whilst risk concentration increases. Skipton operates across a challenging property market—its Connells estate agency subsidiary handled roughly one in ten UK property transactions in 2024, giving the group uncomfortable exposure to a housing market that remains volatile and politically contentious. Interest rate uncertainty continues. Mortgage arrears, whilst still low historically, have risen as borrowers roll off fixed deals onto significantly higher rates.
Policy pressure and political friction
Building societies have also found themselves at odds with government fiscal policy. Skipton joined other mutuals in opposing Rachel Reeves' November budget changes to cash ISA limits, a move that threatens their ability to attract the savings deposits that fund mortgage lending. The friction reflects a broader question about who carries responsibility for housing market dysfunction—mutuals stepping in to maintain first-time buyer access, or a government that has overseen decades of undersupply, planning restrictions, and asset price inflation.
Stuart Haire, Skipton's group chief executive, acknowledged the challenge directly. 'With housing affordability at its lowest point in 17 years, Skipton's role has never been more critical,' he noted in the annual results. That statement contains an implicit admission: the mutual is filling gaps that should not exist in a functional housing market.
The society donated £3 million to charity in 2024, maintaining its commitment to allocate 1 per cent of profits to community causes. That generosity is admirable. The question investors and policymakers must ask is how long mutuals can sustain this dual mandate—operating as both financial institutions requiring sound risk management and de facto social housing providers compensating for market failure.
Skipton has bought itself runway by hitting 2028 targets early, demonstrating operational competence and member growth that provides some cushion. Whether that cushion proves sufficient depends entirely on factors outside its control: interest rate trajectories, house price movements, wage growth, and most fundamentally, whether the UK constructs enough homes to restore some semblance of affordability. The mutual has proved it can fill the gap. The uncomfortable truth is that gap keeps widening.
