Increased competition among mortgage lenders saw property fintech LendInvest swing to a loss in the six months to the end of September and forced to cut more than a quarter of its staff.
The AIM-listed firm, which provides provides mortgages to homeowners and buy-to-let landlords, reported a first-half loss of £15.1m – down from a £14.8m profit in the same period last year.
Earnings were dragged down by a 28 per cent fall in new lending to £415.2m compared with last year, which the firm attributed to “market volatility and limited funding available during the period for new lending in the capital division”.
Net interest income, reflecting the difference between what a firm pays out and receives in interest payments, came in £17.7m lower as higher for longer interest rates become a burden.
As mortgage lenders struggle in an increasingly competitive market, the number of homebuyers in arrears is rising.
LendInvest’s impairments rose to £7.1m, compared with £1.9m last year. Impairment charges reflect falls in the value of a lender’s assets.
To ease margin pressure, the firm plans to cut “people-related costs” by reducing headcount by more than 27 per cent, saving around £5m a year on payroll costs.
The company, which floated in July 2021 and is backed by Atomico, the venture capital firm led by Skype founder Niklas Zennstrom, employed 275 staff and contractors at the end of March.
Chief executive Rod Lockhart said: “After a challenging first half, management is focused on accelerating new lending and returning the business to profitability. The core strengths of our business remain strong and we’re beginning to see encouraging signs of improvement in the broader market landscape.
“Combined with the tough but necessary measures we’ve implemented to streamline costs; these factors are positioning us well to return to profitability in the 2025 financial year.”
Funds under management rose 21 per cent year-on-year to £4.2bn, while assets under management increased 11 per cent to £2.7bn.
