Okay, ladies and gentlemen, and welcome to LendInvest PLC interim results. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session through the phone lines, and instructions will follow at that time. Alternatively, participants can submit written questions using the Ask a Question button on the webcast page. I would like to remind all participants that this call is being recorded. I will now hand over to the CEO of LendInvest, Rod Lockhart, to open the presentation. Please go ahead.
Good morning, everyone. Thank you for joining us today for the opportunity to present our half-year results for the six months ending the 30th of September 2024. I'm joined this morning by Hugo Davies, our Chief Capital Officer and Managing Director of our Mortgages Division, and Stephen Shipley, our CFO. Here's the agenda for today's session. I'll begin by providing an overview of the performance and strategy, highlighting the key drivers behind our results and the steps we're taking to deliver long-term growth. Next, Hugo will review the market landscape, provide insights into the performance of our Capital and Mortgages Divisions, and then Stephen will walk you through our financial performance, covering key metrics from the P&L and balance sheet, cost management, and the work being done to reduce our debt and move to a fee-based asset management model.
Then I'll return to outline the long-term opportunities and how we're positioning the business to navigate challenges, build sustainable profitability, and create value for our shareholders. We'll then be open to the floor for questions. For those of you that are new to our business, on the next slide, there's a quick overview of what we do. LendInvest was founded with the global goal of digitally transforming property finance, leveraging technology to create efficient and scalable solutions to support both borrowing and investing in property loans. Over the last 16 years, we've pioneered solutions that simplify property finance, offering tailored products in short-term development, buy-to-let, and residential mortgages. Through our proprietary technology platform, homeowners, landlords, and developers can access the funding they need with speed and simplicity.
We're transitioning away from returns being driven by being a principal lender towards an asset management model to help drive stable, recurring revenue and build on the success we've delivered in our investment programs. Today, with assets under management now exceeding GBP 2.95 billion, we've built a strong track record of consistent delivery. The robust growth in our AUM is driven by our service-led proposition, which provides sustainable value to both borrowers and investors alike. Our platform connects borrowers with a diverse international network of capital, including financial institutions such as HSBC, J.P. Morgan, and Barclays, as well as pension funds, insurers, and private investors too. This diversified funding approach ensures sustainable growth and enables investors to access a wide variety of property-backed investment opportunities. Since our inception in 2008, we've provided over GBP 7.5 billion in property loans, empowering thousands of projects across the U.K.
Our success is guided by a seasoned leadership team with decades of experience, with innovation at the heart of our approach. We move quickly to adapt to changing market environments. LendInvest bridges the gap between traditional mortgage models and the future of property finance. We're developing customer-centric technology solutions, enhancing the speed, simplicity, and transparency of securing mortgages. Lastly, our collaborations with globally recognized financial institutions, including BNP Paribas, HSBC, and Lloyds Bank, highlight the credibility and strength of our platform. These partnerships reinforce our ability to deliver innovative funding solutions. Last year, market pressures, including high interest rates and subdued market activity, impacted our profitability and lending volumes. In response, in our full-year results, we outlined a focused strategy to return to profitability by reducing our costs, scaling our lending, strengthening our operational efficiency while bringing down our debt and moving towards that capital-light asset management model.
I'll now show the progress we've made against the strategy and the opportunities ahead. As Hugo will come on to explain, while the market over the period was generally supportive for us, we also made strong progress in our strategic priorities. It does continue to be a volatile interest rate environment shaped by macroeconomic and geopolitical uncertainties. In the U.K., the lead-in to and impact of the October budget created uncertainty over the flight path of interest rates, and this has been compounded by global concerns like the potential upping of trade disputes as President-elect Trump returns to the White House and ongoing wars in Ukraine and the Middle East. Despite these challenges, early signs of recovery in the property finance sector are encouraging. We've made meaningful strides in growing our lending, reducing our costs, strengthening our financial position, resulting in positive jaws for our P&L.
Our lending volumes increased by 30% year-on-year to GBP 539 million, a testament to the service-led proposition and product positioning. We've reduced our debt by 29% year-on-year, a significant step towards improving our financial resilience, while at the same time we're growing our third-party capital as we position ourselves as a scalable, resilient asset manager. We've continued to grow our net operating income with a 39% improvement compared to this time last year. Our focus on cost reduction continues. Relocating roles to Glasgow has allowed us to tap into a broad talent pool, and reducing the size of our London office footprint will yield savings in future periods. These initiatives contribute towards our plan to align our expense base by the end of 2025 with the level in FY 2023. In terms of our overarching goal of returning to profitability, I'm pleased to report significant progress here too.
In H1, we reduced our loss before tax by 89% year-on-year to a loss of just GBP 1.7 million for the period, and our EBITDA increased by 103% to a gain of GBP 300,000, and importantly, we achieved a significant milestone by returning to profitability in September from a PAT, PBT, and EBITDA perspective. Looking ahead, we remain optimistic while interest rate volatility and broader economic pressures persist. Supportive U.K. government measures such as incentives for house building and energy efficiency could provide a constructive backdrop for our business. With a disciplined approach to growth, cost management, and fee-based income generation, we're cautiously confident that we can build on our H1 performance throughout the rest of the year and beyond. I want to spend a few minutes now talking you through the progress we've made in H1 on three key objectives to support our return to profitability.
One, we've grown our funding base, attracting high-quality capital. Funds under management, the funding we can draw on to facilitate new lending, increased by 12% year-on-year to GBP 4.67 billion. We expanded our separate account with J.P. Morgan by GBP 500 million to GBP 1.5 billion and extended it for three years, bolstering the growth potential for our buy-to-let and owner-occupied products. We renewed our GBP 300 million financing syndicate with BNP Paribas, Barclays, and HSBC for three years and on improved terms, which will support the growth of our bridge financing and refurbishment products. Our assets under management grew 9% year-on-year to GBP 2.95 billion. In particular, our focus on third-party managed assets drove a 71% increase in net fee income to GBP 11.3 million. The impact of this shift towards a capital-light asset management-orientated model will allow us to drive stable, recurring earnings.
Two, in line with our commitment to expand lending and improve operational efficiency, we've achieved solid growth in new lending with streamlined processes. As I mentioned just now, lending volumes rose 30% year-on-year to GBP 539 million. This was driven by strong growth in the Mortgages Division, with lending up 67% year-on-year, validating the improvements made to improve processing efficiency and our service proposition. Efficiency initiatives in the period have improved our productivity too. For example, we've cut mortgage application to offer times to 20% to an average of 11 days, which is 39%-72% faster than the industry average, according to MoneySavingExpert data. The third pillar of our strategy has been to strengthen our balance sheet, and in H1, we've delivered a 29% reduction year-on-year in our debt, underscoring our commitment to a fee-driven model.
Balance sheet assets reduced to 19% as a proportion of our AUM, contributing to a 77% decrease in impairments over the period. Cash and cash equivalents rose from the full year at GBP 55.7 million to GBP 71.6 million, and our net assets were stable. By doing one, two, and three together, the net result is we're putting ourselves back on the path to profitability and stable earnings growth. Net operating income rose by 39% year-on-year to GBP 17.4 million. Admin expenses fell 20% year-on-year to GBP 16.9 million. H1 loss before tax improved 89% year-on-year to GBP 1.7 million. Adjusted EBITDA improved 103% year-on-year to a gain of GBP 300,000, further demonstrating strong progress towards that return to profitability. I'm now going to hand over to Hugo to dive into the capital and mortgage division performance across H1.
Thank you very much, Rod, and good morning, everyone. It's again a pleasure to be able to present to you today. Firstly, I wanted to start off by providing an update on the market, providing some useful context to where we're seeing growth and performance come through, and equally where we are not, and we appreciate that you will hear many perspectives from a range of comparable businesses and sector analysts, but we also wanted to ensure that this context is placed firmly in the lens of us both being a non-bank, tech-first mortgage lender, and a business going through a multi-year transition as we deliver these interim results. Now, on the base rate, whilst the first rate cut managed to evade us over much of the first half of the year, it did happen, finally, within days of our last presentation to you back in July.
It was never going to be a game changer. 25 basis points in the broad scheme of what we do is a drop in the ocean. However, psychologically, it was pivotal. There was a material repricing of other interest rate benchmarks, and the outlook was much brighter. Financial markets priced in further cuts through 2024, which could have seen us moving into 2025 starting at 4.5% or lower. It also looked like we'd move into 2026 closer to 3.5% or again, some level lower. Now, whether it was PTSD from 2023 or the fact we have a deeper understanding of customer behavior, we did not rush to factor in these reductions into our models, which meant when the next macro event unwound, we were not caught off guard, and speaking of macro events, there have been a few.
Notable ones include the yen unwind in August, the budget in October, and the U.S. elections in November. Hence, despite a further cut in November off the back of some reasonable inflation progress, the mood music has turned more restrictive from a rates perspective, and they are fundamentally still volatile. Andrew Bailey's comments last week were reassuring, but only time will tell what this means for wider activity. In many respects, we're actually quite comfortable with the current position. Yes, there is a dampening effect on total market activity as affordability is again challenged, which in theory reduces overall activity and completion rates. But equally, the cost of savings remains higher for longer for some of our competitors, whereas we've seen securitization markets rally to levels not seen since the first half of 2022.
And through the power of our technology, we've been incrementally growing lending in the Mortgages Division quarter on quarter, inferring that we're capturing market share. If Andrew Bailey is right, and we do go into 2026 around the 3.75%-4% level, this is undoubtedly laying the foundations for the next phase of recovery. Now, it would be great to sit here and say that the swap rate markets have taken this all in their stride, but to no one's surprise, they haven't. That said, we're in a materially better position to deal with these dynamics. Last year, we had a dual-pronged attack from swap rates. On the one front, they were just incredibly high, but importantly, high during the parts of the year where you rely on pipeline creation.
On the other front, indirectly connected, our underlying technology platform at the time, which utilized third-party infrastructure, was not agile enough to keep up with the market. That has now changed. To put it simply, swap rates will close this year higher than where they opened, but despite this, we have grown lending and pipeline activity every quarter for products that are priced in reference to swaps. But it isn't just about top-line growth. We've also built and maintained margin over this period, in addition to reducing the withdrawal rate. And to offer some guidance here, we typically see a higher proportion of five-year business versus the average bank, which means the five-year swap rate is incredibly important to us. And we believe as long as it remains below 4%, that this is a productive level.
And if it does pop above 4% for whatever reason, we should have built a sufficient level of pipeline prior to this, whilst it was lower, to help compensate for any drop-off in new origination thereafter. Now that we're through the rate story, I promised to pick up pace over the next few points. In the context of inflation, we do think generally the signals are positive. Yes, CPI rose to 3.2% in the 12 months to October, up from 2.6% in September, but the increase was rationalized by facts not at this stage considered to be sticky or recurring. It's possible that inflation will rise again in November, but there are factors at play that are predictable and won't surprise the market, which again is important. The elephant in the room is the budget.
We've personally not yet seen any negative outcomes specifically associated with the budget, but it is widely accepted as being inflationary. Therefore, progress in other areas such as services will be imperative to a sensible rate journey through 2025. House prices continue to be resilient, growing by 2.9% year-on-year to September, averaging GBP 292,000, which is the fastest annual growth rate since February 2023. Now, there is clearly nuance to this, with most regions telling a slightly different story, but there are also consistent themes. Cash buyers continue to provide a supportive role, greasing the wheels of the sales market. Bridge finance continues to grow year-on-year, bringing better quality supply to the market. And mortgage product availability, whether through product transfer, second charge, or just simply product design, are all contributing to stabilization.
Coupled with a recovery in household budgets, there is greater confidence to transact, proven by some forward indicators such as mortgage approval rates, which are improving to pre-pandemic averages. Mortgage approvals actually increased by 52% year-on-year to September, the highest level since August 2022. While we think it will be difficult to ascertain whether we will continue to see mortgage approval data in line with pre-pandemic averages, we do believe this is emblematic of the market getting to grips with higher rates. The rental market, which is also subject to a supply-demand imbalance, saw rental levels rise by 8.7% in the year to October. Broader demographic trends, such as high levels of net migration, coupled with our outstanding universities and employment opportunities, are supportive factors that are unlikely to abate in the short to medium term.
A fundamental lack of affordable ownership opportunities, in addition to high costs for landlords, is further boosting rental prices in the near term. That said, we're also seeing landlords invest in their portfolios more, which is leading to higher quality assets and attracting more affluent renters, particularly in London, which is a shrewd decision if you need to improve your yield. So what does this all mean? Well, interest rates are still high and somewhat unpredictable, and only in the past week, we've seen an unusually high level of geopolitical risk breach. But tailwinds continue to gather behind house building and retrofitting. Tailwinds we'll capitalize on during 2025 through our broad range of development finance and short-term finance options. We're also busy improving our product transfer solutions as behaviorally, it is more popular in times of higher interest rates.
And we're also focused on Bridge -to -Let, which will appeal to those landlords both seeking to improve the energy efficiency of their property portfolios or simply investing in assets such as HMOs, which offer a yield advantage in the current climate as the wider sector continues to professionalize and bring higher quality assets to the market. These commercial edges, matched with our focus on cost efficiency and operational resilience, means we're better equipped than ever to navigate challenging markets. We'll now look at the performance of the Mortgages Division, which is the division that houses our property finance products that benefit the most from technology, given their highly replicable and homogenous themes. And we're delighted that this area of our business can look back over this period as a time of innovation, resilience, and growth.
We've launched new products and iterated existing ones, improved operating leverage, grown lending, and pivoted our capital. And underpinning this success is our cutting-edge technology platform that has allowed us to achieve these milestones with less people. And I'll now take you through the specific progress we've made, the strategic milestones we've achieved, and the opportunities we're capitalizing on in what continues to be a dynamic and competitive market. First, in terms of the growth in lending, we've seen a particularly strong rebound in lending, and momentum is building evidenced by strong pipeline growth. The recovery in the Mortgages Division was kicked off by our buy-to-let platform, but is swiftly being supported by growth in our short-term products. Lending is up 67%, reaching GBP 478 million compared to GBP 287 million last year.
Buy-to-let, with average completions of GBP 59 million per month in the first half, in addition to average monthly inquiries being up by 122% year-on-year to GBP 157 million, is a fantastic story. What's really exciting for us is that our new product transfer solution is in its infancy, and ongoing investment here will boost retention. Plus, we have a pipeline of criteria iteration and new product launches that will increase our target addressable market and hedge us against broader market contraction. This resilient performance, remembering that the market is still really just picking back up given the marked correction of last year, is a testament to our proven ability to deliver scalable growth in a competitive market, and we have spoken at length previously about capitalizing on windows of opportunity, and that is exactly what we have done, and we believe has allowed us to grow market share.
We are also focused on strengthening our short-term lending proposition. We've been refining our processes, for example, by enhancing automated valuation models, adding better quality data sources, as well as introducing dual representation and various other experience improvements. We have achieved a 15% boost in bridging application efficiency between March and September. These innovations underscore our ability to deliver flexible market-leading solutions for our clients. Short-term lending remains incredibly important to our business, not only because of its inherent complementary qualities to other lending products, but also because of the return on equity potential given broader margin friction in longer-term products as a result of higher interest rates. With the new government has come a refreshing approach toward both energy efficiency and environmental impact, and it is in this context that we believe bridge-to-let will be an important solution for property investors and landlords in 2025.
We've also had tremendous success from a capital raising perspective. Post-period end, in early November, we settled a GBP 285 million securitization of prime buy-to-let and residential mortgages, achieving the tightest pricing in the sector for a three-year buy-to-let or non-conforming mortgage securitization in the U.K. You were able to capitalize on momentum that has been building in the capital markets for some time. But we're also equally able to navigate a tricky period that straddled both the budget and the U.S. presidential election. Market supply in September was particularly large, helping to contribute to a record level of securitization issuance.
This is not only good for the small proportion of the business we retain on our balance sheet from time to time, but this is also great for our third-party capital providers who either access capital markets regularly or use the capital markets on an ad hoc basis when there is a better liquidity or return dynamic versus other potential funding solutions such as savings deposits. We have also strengthened our funding partnerships, as was mentioned before, and therefore, we're delighted that we have also been able to extend our JP Morgan separate account by GBP 500 million to GBP 1.5 billion to support further divisional growth. Additionally, we improved and extended an important financing agreement with BNP Paribas, Barclays, and HSBC, enhancing both our capital structure and return profile.
Furthermore, we have carried out and will continue to carry out a number of other transactions that will all deliver either a combination of an improved maturity profile, better returns, or a wider investment criteria. These partnerships underpin our ability to access diversified funding and scale our mortgage offering sustainably, testament to the quality of the loans we originate and how we operate as a key strategic partner to our investors. Now, finally, in the context of products and customer satisfaction, you know we haven't lost sight of the importance of staying relevant despite being busy reducing costs. We've launched new products and solutions, including product transfer functionality. We've launched Bridge-to-Let, and we've also launched Expat Mortgages, all of which have enriched our offering, providing brokers with seamless solutions and tailored products for diverse and ever-changing borrower needs.
These innovations can either simplify the broker journey, helping them handle and process more business with us, support customer retention through intuitive, efficient processes, or provide end borrowers with more options to handle their affairs, and that all contributes to something that is incredibly important to us: customer satisfaction. Our commitment to service excellence is evident in our 4.6 Trustpilot rating, reflecting consistently positive feedback from brokers and customers. If you want your mortgage case to be handled well, which means with certainty, clarity, speed, and experience, you put that case with LendInvest. We believe strongly that this is a further differentiating factor between us and our peers in a world of heightened uncertainty. Brokers and borrowers want lenders that can move decisively and clearly, but have the skill and sophistication to also see the nuances and merits of a case too.
So, to wrap up, our Mortgages Division is making significant strides, which we're particularly proud of, with customer-centric enhancements driving more lending, which is attracting great capital. This positions us strongly to capture market opportunities while maintaining our strategic focus on sustainable but scalable growth and operational excellence. I'll now turn to the Capital Division, a division that is a key component of our growth strategy and is central to our vision for delivering sustainable long-term value. LendInvest Capital is an expert provider of specialist investment products backed by real estate debt. It focuses on complex or larger loans that benefit from an expert human-centric approach. The division has also been a source of predictable recurring fee income for some time and, in many respects, inspires the approach for the mortgage division's transition.
Now, we have been constrained in the Capital Division for some time, driven by a variety of factors, but an important aspect has been the lack of convincing, scalable lending opportunities in a period of high interest rates. Now that interest rates are starting to fall, we are starting to see similar green shoots to that of the Mortgages Division a year ago, with inquiries picking up quite powerfully. We're seeing more compelling projects from development finance to large residential investment loans. As these opportunities recover, as rates fall, it becomes less challenging to raise good quality capital. This is because the third-party capital typically wants a reliable, predictable program of deal flow versus ad hoc opportunities, and as these opportunities emerge, the Capital Division not only reduces credit risk on the balance sheet, but it is also highly rewarding, especially when compared to tight lending margins in longer-term lending.
It's these dynamics that make the Capital Division important to the overall strategy. We launched a new fund in early October and expect to launch further new funds through 2025. This is the point. At the heart of this division is our transition to an asset management model, a pivotal element of our path to profitability. By prioritizing fee-based income over balance sheet exposure, we're creating stable, recurring revenue streams that reduce risk while also increasing scalability, as Rod described before. It's a model that not only aligns with investor expectations, but also positions us to thrive in evolving market conditions. As Rod described before, this strategy is delivering measurable results. Net fee income has grown by an impressive 71% year-on-year, underscoring our focus on income stability.
Assets under management now stand at GBP 2.95 billion, a 9% year-on-year increase, showcasing the growing demand for our offerings, outstripping the growth of larger banks. And we've reduced balance sheet exposure by 38%, further enhancing our capital efficiency and de-risking our operations. Taken together, these are good results, and we believe demonstrate not just that we are on the right flight path, but there is still significant room for further growth. Looking ahead, we are focused on scaling this model even further. The launch of LendInvest Secured Credit Fund III is expanding our product range, targeting returns of 7%-10% per annum. Our development loan pipeline has grown by 50% from Q1 to Q2, demonstrating our ability to seize opportunities in a stabilizing market. And we remain committed to deepening our relationships with institutional partners, scaling co-investment opportunities, and driving capital efficiency through risk syndication models.
In summary, the Capital Division is delivering on its promise, creating a scalable, resilient growth engine that aligns with our broader strategic ambitions while providing consistent value for our investors. Now, as I said at the start, I'd like to spend a few minutes now just bringing the tech side of our fintech business to life a little more to help demonstrate the value of our investment in technology and what that means for our customers, clients, and investors, and to do that, I'm going to focus on the buy-to-let business, one of our strongest drivers for growth, but also one where our tech investment is paying dividends. We have transitioned our buy-to-let operations to a highly scalable model, allowing us to significantly increase operational capacity without proportional increases in costs.
With an unrelenting focus on scalability seeping into every fabric of our operational framework, we have laid the foundations for replicating this success across our short-term and residential mortgage products, but what does this actually mean, or why does it even matter, well, we have reduced the cost of origination by 40% since the last financial year through targeted process improvements and advanced automation. That automation has helped us eliminate non-value, previously human-done tasks, enabling teams to focus on critical activities that improve the quality of decision-making. Streamlined workflows to minimize manual intervention enhances processing speed and operational reliability. Underwriter efficiency has increased significantly, with over 100 applications processed per underwriter on a monthly basis, demonstrating the impact of process automation. SLA performance improved through smarter pipeline management and automation, ensuring faster and more reliable customer outcomes.
We have delivered on year-on-year efficiency targets, supporting our sustainable business growth and profitability during this period. Buy-to-let therefore serves as a blueprint for operational transformation, showcasing the tangible benefits of our technological investments. This model highlights how technology can deliver cost-effective, scalable solutions that are replicable across both product teams and wider divisions. These advancements reinforce our position as a leader in technology-enabled property finance, driving competitive advantage and investor confidence. Thank you very much for taking the time to listen to me speak today. I'll now hand over to Stephen to run through the financial results in more detail.
Thank you, Hugo. A few slides now with detail on our financial performance, and then I'm happy to answer any further questions at the end. Firstly, I'd like to point out that largely these results are a clean set of numbers with no material transactions or significant one-offs impacting the first half of the year. It's a good sustainable performance to build on. The main headline is the significant improvement in net loss, reducing by 89% to GBP 1.7 million. Further, there is very good turnaround to an adjusted EBITDA gain of GBP 0.3 million. This reflects disciplined financial management and steady progress on our profitability roadmap. The key driver of the improvement is net fee income, which increased by nearly GBP 5 million, an impressive 71%, demonstrating the successful execution of our strategy to prioritize third-party managed assets.
This fee-based approach not only strengthens income stability, but also reduces our risk profile. Net interest income growth is 5%, with a change in product mix to higher margin products offset by a 32% reduction in principal investment AUM as we transition to a more capital-light strategy. Currently, just 19% of platform AUM remains on balance sheet, down from 31% last year. While we've grown net operating income by 39%, we've also reduced administrative expenses by 20%, bringing them down to GBP 16.9 million. This reflects our continued focus on driving operational efficiency and managing costs effectively. Further, impairment charges fell by 69% to GBP 2.2 million, returning to more normalized levels. This significant reduction underlines the strength of our risk management practices and asset quality.
Okay, next up, let me take you through the balance sheet highlights, which showcase the strength of our financial position and careful management of our resources. We've seen a 29% increase in cash and cash equivalents rising to GBP 72 million. This reflects high levels of activity around September month end and our focus on building liquidity to support the business's growth. Loans and advances grew by 17% to GBP 557 million, driven by a 30% increase in new lending. This reinforces the momentum we're building in expanding our loan book while maintaining robust lending criteria. Net assets remained more or less stable at GBP 56 million, reflecting prudent balance sheet management despite ongoing market challenges. Our approach continues to balance growth opportunities with maintaining a strong and resilient capital structure, ensuring we're well prepared for future opportunities while safeguarding against potential risks.
These metrics underline our ability to grow strategically and manage our resources effectively, positioning us for sustainable success. So, finally, continuing the story of our strategic plan, I'd like to highlight the strong progress we've made in strengthening the balance sheet and reducing the business's risk profile. These efforts are critical to supporting our path to profitability. We've made significant strides in shifting to third-party capital, with 81% of total assets under management now funded externally. That's a 12 percentage point increase since March, demonstrating our continued focus on transitioning to a capital-light model. Cash increased by 29%, reaching GBP 72 million. This reflects high levels of business activity combined with disciplined liquidity management, ensuring we're well positioned to navigate market volatility and seize growth opportunities. Impairment charges fell by 69%, down to GBP 2.2 million, returning to more normalized levels.
This reduction underscores the strength of our risk management practices and improved quality of assets. Our ability to deleverage the balance sheet further reduces risk exposure, making the business more resilient to market pressures and better aligned with our long-term strategy. These results reflect not just strong progress, but a robust foundation for the next phase of growth. They underline our commitment to a disciplined, sustainable approach that supports profitability while maintaining the flexibility to adapt to changing market conditions, and with that, I hand back to Rod. Thank you.
Thank you, Stephen and Hugo. Good progress. I'm now going to turn to our strategic priorities and the long-term opportunities we're going after as we focus on building on the progress of the last six months. We'll continue to grow our lending and expand our product reach. As you can see from this chart, we're getting back to lending at record levels. The growth has been driven by our Mortgages Division and, in particular, the buy-to-let lending. Success has been driven by a strong focus on excellent customer service and broker service, helping us to attract and retain business without compromising on margin. In the buy-to-let space, we continue to focus on professional portfolio landlords.
Increasingly, we're seeing these landlords increase their exposure to HMOs, multi-unit freehold blocks. The market continues to professionalize, and we see the emergence of larger and larger portfolio landlords. As Hugo pointed out, we've recently introduced a new product transfer process for buy-to-let borrowers as they reach the end of their fixed-rate period. Our focus is now on increasing our conversion rates to drive lending volume, and we expect PTs to be an increasingly large proportion of our buy-to-let lending in the months and years to come. In H2, we'll relaunch a streamlined residential mortgage proposition to focus our sales messages, boost our broker engagement, and grow our market share. This refined offering is designed to capture anticipated market opportunities as interest rates come down and mortgages become more affordable to a wider range of people.
To enhance customer and broker experience and increase the speed to process mortgages, we're targeting higher use of automated valuation models, AVMs, across all of our mortgage products. We're working with our funding partners to develop products to increase their use, and we'll embed them within the technology platform. To support our mortgages proposition, we'll strengthen our partnerships with strategic brokers, mortgage clubs and networks, and introduce roaming underwriters to raise our profile through industry engagement while maintaining an agile underwriting process. One thing that's really clear from this slide is the growth opportunity provided by increasing our lending on the LendInvest Capital side as the property market recovers and SME house builders have the confidence to start new projects. We have a number of projects to raise capital to support lending in this area, which is set out on the next slide.
Our capital raising strategy is designed to drive scalable growth while maintaining the flexibility and resilience needed in a dynamic market. Let me take you through some of the opportunities. Establishing new separate account partnerships for larger bridging loans and development loans. This will reinforce our capital-light model and drive NFI growth further. Raising additional capital into our new Fund III will unlock new lending opportunities, diversifying our funding further too. Developing tailored funding solutions for SME house builders will help to address this market segment, which is critical to supporting U.K.'s housing needs and growth ambitions. As you can see from the chart on the right, our focus on managing more and more third-party capital and growing our NFI is working. This trajectory reduces risk exposure, aligns with the strategy for sustainable scalability. Our focus on NFI income is to strengthen the predictability and resilience of our revenue streams.
In terms of the focus on driving profitability and managing costs, the message today is we're on track. We're firmly on that path to profitability, with September marking an important milestone as we achieve profitability from the EBITDA, PBT, and PAT perspective. This reflects our disciplined approach to growth and cost management. By expanding efficiency gains, we're scaling our operations and widening our positive jaws, ensuring that income growth continues to outpace costs. We continue to leverage AI-driven tools and automation, including advancing technology-enabled growth that reduces the cost to originate and enhances scalable operations. A strategic focus on cost has enabled us to realize these sustained savings through these process optimizations. Our shift to a capital-light model is driving these resilient income streams, increasing stable fee-based revenues that offer greater predictability and long-term stability.
Our profitability momentum is clear, with the September's run rate profitability providing a strong foundation for sustainable growth moving forward. Looking ahead, we remain cautiously optimistic about delivering profitability during the rest of the year. We remain mindful that ongoing interest rate volatility, triggered by both macroeconomic and geopolitical uncertainty, could present headwinds in H2. But we are reassured by the supportive U.K. government measures aimed at catalyzing house building, improving energy efficiency, and professionalizing the buy-to-let sector. Thank you for listening to the presentation. We'll now open the floor up for questions.
We will now begin conference line questions. As a reminder, participants can submit written questions using the Ask a Question button on the webcast page. To ask a question on the phone line, please press star one. As a reminder, please press star one to ask a question on the phones. We'll pause for a moment to assemble the queue. Currently, there are no questions on the phone line, so I'd like to hand over to Chris Semple to read out the written questions submitted via the webcast page.
Thank you. We'll start. We've got a question coming from Rae Maile at Panmure Liberum. In fact, it's a two-parter, so you can split it between you guys. Rae says, "Many thanks for the presentation. Could you please talk us through your competitive positioning with respect to the pricing of your product range?" And the second bit, "On costs, after an excellent performance year -on -year, are there still areas where you believe that you could achieve more?"
Great. I'll pick that up, the first part of that question up to start with, and I'll let Hugo jump in as well. I'll pick up the question on costs and maybe drag Stephen into that one. In terms of product pricing and positioning, just a reminder, for all of our products, we provide a service proposition. We're seeking to provide brokers and borrowers with a faster, more transparent lending process. In providing that service, we don't need to lead on price, and we never choose to lead on price. We position our products off the top of the sourcing tables and allow brokers to make that selection to get their mortgages done quicker in a more transparent way. Now, of course, the price is relevant, and when we're priced significantly wide of the leading products, that does have a negative impact on our volumes overall.
So we do like to be nearer the top of the tables than nearer the bottom, but it is a selection based on service. To give you some idea of how our relative pricing has been over the last six months, we've been in a relatively good position from a relative pricing perspective. Over the previous period, we were at a structural disadvantage to retail banks, which had savings deposits and were taking some time to raise the price of those deposits despite capital markets and interest rate markets having moved so significantly. We've seen that normalize over, really, since the start of this year, and that has translated for us into products that are better positioned against the leading price makers. As I said, we don't need to lead on price. Hugo, maybe do you want to add something, anything further there?
Yeah, I completely agree. There's a couple of other dynamics, I guess, at play. One is clearly we're rebounding off what was a very difficult year. So there's been an incredible focus on building and maintaining margin, as we described through the presentation, and therefore emptying the locker in terms of pricing isn't the core strategy for our business right now. And as Rod said, we don't need to be market-leading from a pricing perspective, and that's evidenced by the pipeline creation that we're seeing across all products right now. As we described in the presentation, development finance is up 50% quarter on quarter. Our buy-to-let business is up. We have a pipeline that's well over GBP 300 million.
And through the month of November, we've seen incredible pipeline creation in other short-term products such as bridging finance, which all goes to show that the service proposition is really helping to make up for any kind of marginal differences in pricing. The other component is, versus last year, our cost of capital is fundamentally lower as well. So not only can we maintain pricing at a certain level because our costs are coming down, we're also seeing margin expansion through those means too.
Thanks, Hugo. I'll pick up the second question, which was around costs. So I think clearly we're very pleased with the progress that we've made on reducing admin expenses over the period. But I'd say that the change that we've had to pivot the business to really focus on costs and operational efficiency, driving growth with less resources, that focus is absolutely now embedded in our business. And we really believe that we can drive continued cost savings from where we are today. But also, as we regrow, we're going to be growing without the need to add a massive amount of resource costs, so opening those doors further. You'll have heard in the presentation and seen the results that there's reference to downsizing of our London office space.
That should impact the cost base from the beginning of next financial year, which will be great and will help to support cost reduction further. And then, Stephen, is there anything you want to add to that point?
Yeah, just on top of the reduced London footprint and the kind of generic technology and learning curve efficiency drivers that we've got working for us, I think there's going to be a good focus on back-office efficiency as well with the sort of lean re-engineering program. Also, a focus on reducing legal and professional costs that are still running quite high. I think as the business becomes a bit more mature, particularly in the back-office world, we can start to drive a bit more reduction in those legal and professional costs, which are still running quite high. So I still see a bit more sort of road for efficiency improvements in the business.
Just one further point, I think, also because we've been jumping on about product transfers. But again, to contextualize that in the world of lending, we speak about buy-to-let a lot because buy-to-let for us as a product is where the most tangible recovery is today. Other products are firmly in recovery, but they're maybe a couple of months behind in terms of that good positive momentum crystallizing in bottom-line numbers. In the context of buy-to-let, why we think product transfer is quite important is because if we can increase our retention rates up to what we believe to be a more industry standard, which we think is around 65% conversion, that in itself would contribute approximately 20% to our plan going forward.
And the reason why that's powerful is because from a new front-book origination perspective, again, as we described in the presentation, we have never been more efficient in terms of processing more new buy-to-let cases. We've also lowered origination costs. Product transfer cases are even better from an operational perspective because you're already using data that you've already acquired. You already know the customer, and that means the time spent on each individual case also starts to reduce as well.
Great stuff. Thank you, guys. As it stands at the moment, that's it. There's no more questions on the lines or on email. So I think we're probably done.
I'll just finish by saying thank you, everyone, for your time this morning and the opportunity to talk through results. Clearly, overall, we're pleased with the progress we've made so far this year. Our focus is on continuing to execute our strategy carefully and building sustainable value. If you do have any follow-up questions, please do reach out to the investor relations email address. If I don't speak to you before, I wish you all a great festive season and look forward to catching up with you all in the new year. Thank you.
Rod, just before you go, we've got a late entrance from Andy from Equity Development. He's on the line, so let's patch him through.
Yeah, can you hear me?
Your line is open.
Yeah, morning. Well done. Good messages. Just a closing question about there's been a number of references, not only your growth, but also as Hugo was saying, you're taking market share. So I wonder if you could give some insight as to where that's coming from, whether it's the traditional retail banks, whether it's the challenger banks, and where you see competition trying to catch up with your technological advantages. If indeed people have the commitment and the capital to invest in that, or whether the LendInvest technical proposition remains a clear market leader.
Thanks, Andy. I'll start with that and pass over to Hugo. So first of all, in terms of the market share and where we're coming from, through the presentation, you'll have noticed one stat around mortgage originations being up 67%. You'll also have noticed market mortgage approvals being up about 51%, I think it was. So I guess that's sort of two numbers you can look at to perhaps indicate that our growth has not just come from market improvement, but also from growth in market share as well. Where is it coming from?
Well, I mean, the first thing, in the buy-to-let space, we continue to see this move from amateur landlords, which were typically catered for by more high-street lenders, towards professional portfolio landlords, more catered for by specialist lenders, including the specialist savings banks as well as non-banks like ourselves. So I'd say that's the big trend that's been going on for many years and I think is continuing. And as the market is reopening, the people that we're seeing buying are these bigger professional portfolio landlords, and a lot of them are buying HMOs, multi-unit freehold blocks, as opposed to very simple apartments. So we're seeing that trend continue, and we expect that trend to continue over the months and years ahead.
As I guess a relatively new player in this space compared to the dominant incumbents such as Paragon and One Savings Bank, we see a high proportion of our business coming from new originations rather than product transfers from our back book. So at the moment, we're comfortable. We're doing very well on new originations. And as our business becomes more mature and the book looks a bit more like that of Paragon and One Savings Bank, we'll start to see, as we've talked about, an increasing proportion of originations coming from that back book too as those businesses benefit from. But Hugo, do you want to comment on anything?
I don't know if it's possible to go back a slide or two. I think there's a chart which shows our new lending by division by quarter. I think it's arguably the best way to think about this, Andy. On that chart, you would see incrementally that over the first three quarters of this year, we've been able to maintain lending levels. They've actually been marginally growing quarter on quarter. But if you were to extrapolate a swap rate over that period, then you'd see growth in the swap rate. We know it's very well documented. There's correlation between clearly what the level of the swap is at and what happens in terms of broader activity. So as swap rates increase and mortgages become more expensive, unsurprisingly, affordability is stretched.
There's less activity, and the market tends to contract overall. We saw that in 2023, where there was a 50% contraction in purchases in buy-to-let and a 50% contraction in remortgage business. Therefore, you can draw a similar parallel. So the broader market has probably shrunk a little bit over the past few quarters, but we've been able to incrementally increase our lending relative to that position. You could argue that's partly down to the fact that we're coming from a lower base. But also fundamentally, it comes back to a point that I made before around we're still living in a very uncertain world. And we've seen that on countless occasions and actually been able to make a case with a lender right now who can give you certainty amongst all of those kind of headwinds we've seen, whether it's particular parts of the budget, but also broader macro themes which are contributing to higher rates for longer. Being able to go to a lender like LendInvest, who can give you a quick decision. Last results, we said a quick decision isn't always about just saying yes.
It's also about giving a quick no and being able to move on. But being able to give you a quick yes, understand your case in the context of this new world, is really important in terms of providing a really decent and stable funding solution for our end customers.
Yeah. That makes a lot of sense. And the depth and quality of your whole proposition is what is leading to that accumulation of share.
Yeah.
Thanks. And just very quickly on the second part of your question around technology. So we genuinely believe that we're leading on technology in the space today. And we have that belief because we're quite happy to go out and demonstrate our technology to competitors, brokers, and anyone who wants to have a look. We're quite happy to share what we've built. And each time we receive positive feedback on what we've done and how that differentiates us from other people in the market, and particularly the feedback from brokers and intermediaries who really do select our service because they can do more business with us with less of their time. So we're comfortable with leading on tech.
I think clearly lots of businesses are spending huge amounts of money trying to catch up. And that's why it's important for us to keep iterating, keep improving the process. And ultimately, we'll get one day to the point where you can get a mortgage at the touch of a button if we keep focusing on improving the processes as we are at the moment.
Can I just add to that? It's not something that technology has been important to the business ever since inception. So it's not just about the level of investment. It's the time we've had to invest in technology and pivot through different market cycles, but also a multitude of customer preferences and changing needs that have reacted to political climate, to ESG, to high interest rates, whatever it might be. We've always been invested in technology, and that's what's ultimately leading to the products that we have today.
Yep. I've seen it at work. It's very impressive. And a final, final question very quickly. Both in the RNS and today, you've mentioned roaming underwriters as part of your various ways of reaching underlying business. Could you explain what a roaming underwriter is?
It's an underwriter that will go and spend most of their day at a desk in the office, but will also go in and visit strategic partners and build relationships with strategic brokers as well. So it helps to give us, I guess, regional presence across the U.K., but also build deep relationships with our intermediary partners and understand some of the challenges they face day -to -day, which is clearly important as we deal with iterating both the technology platform, but it's also the product suite that we have.
Yeah. Got it. Thanks very much.
Okay. Great. We've got no more questions at the moment, and we're over time. So I think we'll probably wrap it up at that point. Thanks.