'Windfalls' for savers and borrowers

YORKSHIRE Building Society reckons it handed back nearly £70m to its 2m members last year ? equivalent to £35 each.

The mutual's results showed profits rose 5.3% to £73.4m. Iain Cornish, chief executive, told This is Money that a bank of equal size would have been expected to make profits of around £140m.

'It means we can give a better deal to our members,' he said. 'We calculate that in the past seven or eight years, since the major building society conversions began, we have handed back around quarter of a million pounds to customers.'

Yorkshire, the fourth-largest society behind Nationwide, Brtiannia and Portman, grabbed £3.24bn of the booming mortgage market last year, up nearly 15% on 2003. A surge in house prices in the past five years has fuelled record growth in mortgages and spurred lenders to take advantage.

Cornish, who expects the market to be 'subdued' this year, said the society had avoided 'riskier' areas pursued by other lenders - such as buy-to-let, agreeing mortgages larger than the value of homes or offering money to people with poor credit track records, a market known as 'sub-prime'. Overall arrears and repossession fell to just 0.004% of total Yorkshire mortgage balances, down from 0.006% a year earlier.

However, Cornish said Yorkshire had been trialling a move into equity release, where home-owners, usually retired, borrow against the value of their home. However, he said the society was 'traditional' and had no plans to move into the multi-billion pound credit card market.

Around 300,000 savers joined the society in 2004, taking the total to 1.6m. Yorkshire also pointed out that the gap between the interest rates paid to savers and the rate imposed on borrowers was 0.97% - 'one of the lowest of any major High Street lender'.