Strong Lending by Mutuals and Building Societies.

by Mark Johnston

Strong Lending by Mutuals and Building Societies.

Building societies have often been an overlooked option when looking for a mortgage.

Unlike the high street banks instead of being owned by shareholders, these mutual savings and loans organisations are owned by their members. In plain English, building societies are owned by their savers and borrowers.

HousesWhat that means in practice is that they have managed to retain something resembling ‘business as normal’ despite the global credit crisis, which brought several banks to their knees.

However, a customer exodus from traditional banks has boosted building societies place in the mortgage market.

Sean Oldfield, the head of Castle Trust, who provide a range of financial services,  said: “The recovery of the mortgage market since 2009 is as much a story of the strength of building societies, which have adapted and innovated, as it is about the retrenchment of the bigger banks.”

Building society mortgage approvals now account for 29 per cent of all mortgage approvals, the highest level in at least a decade.

According to Bank of England figures, building societies advanced £14.5 billion in mortgage lending over the five months, which accounts for a quarter of all mortgage lending.

Recent figures reveal gross mortgage lending by building societies and other mutual lenders in the UK was up 30 per cent to £4 billion in July, the highest monthly figure since data was first published for the mutual sector at the start of 2010.

In the first seven months of the year gross lending by the sector was £22.2 billion, up by 30 per cent compared to £17.1 billion in the same period last year. This gives mutuals a 24 per cent market share of gross lending in the year to July, up from 21 per cent in the same period in 2012.

Stephen Williams, head of the building societies practice at Deloitte, said: “These lending figures show that mutuals continue to thrive and that lending is up by about a fifth in the first few months of this year compared to last.

Building societies have seen a significant jump in the number of mortgages offered to first-time buyers this year, with the number of loans up by 50 per cent, according to new figures from the Building Societies Association (BSA).

Building societies also dominate the mortgage best buy tables, offering 83 per cent of the most competitive deals.

Paul Broadhead, the head of mortgage policy at the Building Societies Association (BSA), said: “Building societies and other mutual lenders continue to play a dominant role in supporting members of the public looking to buy a new home.”

Andrew Montlake of mortgage broker Coreco, added that the fact is “building societies base decisions on “old-fashioned underwriting” and looking at an individual’s unique set of circumstances before making a decision, rather than holding them up to a strict set of criteria and rejecting them if just one box is not ticked.”

Some industry experts believe that Britain’s mutuals are warmly regarded by their customers and applauded for bringing choice to the banking market.





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