by Mark Johnston
Building Societies Hold Large Share of First Time Buyer Mortgages.
In the first 2 months of 2013 the Council of Mortgage Lenders (CML) said that the number of first time buyers hit the highest level for 5 years.
Figures show that lending to first time buyers increased by 3 per cent in February this year, thus making it the busiest start to a year for people joining the property ladder since 2008.
It seems then that many first time buyers are continuing to take advantage of the current more favourable market conditions, with first time buyers accounting for 43 per cent of all house purchases.
Paul Smee, the Council of Mortgage Lenders (CML) director general, stated “we hope the new initiatives that have been introduced will further stimulate first time buyer activity”.
Mark Harris, chief executive of mortgage broker SPF Private Clients, adds “the funding for lending scheme is playing a significant part in encouraging borrowers to be more positive about their chances of getting a mortgage and being able to afford it”.
Some industry experts are of the opinion that property buyers seeking a ‘good’ mortgage deal should take a look at the building society sector.
Mortgage experts have also suggested that banks may grab headlines at the moment with ‘apparently’ attractive mortgage rates but building societies are the best bet for home buyers who actually want to obtain a loan.
Robert Dibb, of Advoco Financial, a mortgage broker, adds “lots of building societies have had really strong products recently”.
Recent research has shown that building society mortgage approvals now account for around 29 per cent of all approvals, which is the highest level in at least a decade.
Current figures from March also reveal that gross mortgage lending by building societies and other mutual lenders totalled £2.9 billion, which is a rise of 8 per cent compared with March last year.
It seems that building societies generally offer a better deal to consumers as they do not have to pay dividends to shareholders.
According to Castle Trust, the housing investment company, building societies currently offer approximately 83 per cent of the most competitive deals, meaning they are dominating the mortgage best buy tables.
Stephen Williams, head of the building societies practice at Delottie, the business advisory firm, states “these lending figures show that mutuals continue to thrive”.
Therefore it seems that building societies are now taking advantage of gaps in the market as many banks reduce their lending.
In conclusion it appears that building societies have become well adapted to the financial climate and have therefore come up with innovated products. This all seems to demonstrate their commitment to meet the needs of responsible borrowers and their ability to work in partnership with customers.
It appears then that banks have much to learn from their ‘mutual cousins’ as all these figures seem to show that customers are now voting with their feet. Building societies are therefore enjoying a degree of public trust that banks can only envy!
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