Belfast Telegraph

Danske customers borrow highest loan to value mortgages

By Margaret Canning

Danske Bank mortgage customers in Northern Ireland have the highest 'loan to value' mortgages of its five European markets, it has emerged.

Mortgage customers of the bank here are typically borrowing 69.9% of their home value, and making up the rest with a deposit, according to the parent bank's interim report for the first nine months of this year.

That leaves Northern Ireland customers of the bank with the highest loan to value ratio of Danske's markets - the lowest is in Finland, where borrowers were putting up 40% deposits.

Meanwhile, Danske Bank in Northern Ireland - in its results for the nine months to September this year - said recovery in the property market and economy continues as it posted improved results, with a 64% jump in pre-tax profits to £107.3m.

It had approved £185m in new mortgage lending to first time buyers, switchers and home movers in the year so far. And income was £164.3m, up 5.6% from £155.6m.

Kevin Kingston, deputy chief executive of the bank, said the bank had effectively "shaken off the challenges of the recession" and was "optimistic and positive" about 2016.

And he said contrast between mortgage lending for Danske Bank in its markets was down to "cultural norms" with more people in European countries spending longer renting than their counterparts in Northern Ireland.

"It's very much a reflection that within the UK market it's very different to other areas in Europe.

"Our mortgage book has improved extremely well and that reflects a pretty strong, conservative perspective on lending that we have taken. A lot depends on where market trends are between rental and purchasing, and what stage in life people acquire property.

"Obviously for us in Northern Ireland we are busy in the first time buyer market, which always has a relatively high loan to value."

Business lending was also healthy though growth was not necessarily from newly-acquired clients, he said.

"The biggest trend has been the resurgence in demand from existing customers - such as Westland Horticulture, an acquisition for us last year, which bought out William Sinclair Holdings in England earlier this year."

But he said political instability sometimes damaged confidence. "Business confidence is a better than a year ago but is it as good as it was at the start of this year? Probably not quite - though that may be down to weakening in the global economy and the impact of the sterling/euro exchange rate, as much as any political instability."

He said no more branch closures were planned. "We have made it clear that we are at the right size for the market at the moment, with 46 branches."

As for the issue of a Brexit, he said: "From business customers and from my role in the Northern Ireland Chamber, the majority of Northern Ireland businesspeople would want to remain within the EU. Europe is such a major business partner for us and anything that makes doing business with those markets more difficult - which a Brexit would - would be a negative." The bank, formerly known as Northern Bank, reported a credit in loan impairments thanks to recovery in property and improved trading for its customers.

Its statement added: "This credit exceeds any new and increased charges in respect of impaired loans, resulting in a net recovery of £38m for the year to date."

Danske Bank chief executive Gerry Mallon said: "We have continued to make good progress".

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