Building Societies Meet Borrower Needs Amid Market Changes

Building societies are experiencing significant growth. Recent data from the Building Societies Association shows that mortgage balances at building societies grew by £8.6 billion in the six months leading to March 2024, while other lenders saw their balances drop by £10 billion. This data shows that building societies are now key to the recent expansion of the mortgage market. 

While the ongoing trend of the increase of first buyers has contributed to this growth, specialist lending has been a key driver. Building societies are stepping in to help borrowers with complex needs, filling gaps left by mainstream lenders.

 

Addressing the needs of non-traditional borrowers

To help borrowers with their complex needs, building societies have positioned themselves as the go-to lenders for borrowers whose cases fall outside the bracket of what traditional banks offer. Banks may focus on broader markets, whereas building societies cater to niche groups with tailored lending products.

Groups that would benefit from specialist lending include:

• Self-employed individuals with fluctuating incomes

• Older borrowers borrowing in and into retirement

• Expats looking to buy property in the UK

This specialist focus allows mutuals to provide solutions for borrowers who might otherwise struggle to secure a mortgage. Like us and many other building societies, we have adopted personal underwriting practices to assess borrowers on an individual basis, rather than relying solely on automated systems.

 

Recognition for Innovative Lending

Our work in specialist lending was recently recognised when we were awarded the ‘Best Smaller Lender – up to £100m in lending’ at the Legal & General Mortgage Club Awards. 

This shows that the needs of brokers and borrowers are changing from the norm, with them increasingly seeking out flexible, tailored mortgage solutions to address complex needs.

 

Building Societies Superior Service and Satisfaction

Recent studies have found that building societies are also outperforming banks on customer service. A recent YouGov survey said that 92% of building society customers were satisfied with the service they received, compared to 87% of bank customers. 

Building societies are seen as important community pillars. 75% of their customers agree, compared to 49% of bank customers.

The personal approach mutuals take is also more favourable with brokers, with their average satisfaction rating scoring 85.7% in the Smart Money People survey, surpassing banks. 

 

Conclusion

All this to consider, building societies are continuing to prove that they are more than just traditional lenders. By focusing on personalised service and specialist lending, they are filling crucial gaps in the market and helping a wider range of borrowers secure the mortgages they need.

 

Further reading

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