Feature - Lenders
Mortgage Solutions | 11 Feb 2013 | 14:57Follow @adamfrwilliams
In the first in a series of articles examining the building society sector, Mortgage Solutions' senior reporter Adam Williams sits down with Cambridge Building Society.
When you think of Cambridge, it's the beautiful architecture, fascinating history and famous university you perhaps think of first, although all seem oddly absent on my taxi ride from the railway station to Cambridge Building Society's headquarters on Newmarket Road.
A Subway sandwich shop, Sainsbury's Local branch and a Polish supermarket are all that I can see from the car windows.
"Yeah, the taxi driver drove you around the a**e end of Cambridge," jokes Stephen Mitcham, chief executive of the society, when I tell him about my journey.
Mitcham has helped revolutionise the society since his arrival in 2007, expanding its lending reach from just Cambridge to much of the East of England.
At a time where building societies across the country are taking an increasing slice of the mortgage market Mitcham suggests that the key to the success of both the 164-year-old society, and the wider mutual market, has been their simple business model and ability to think long-term.
"We take in money from savings and we lend it out on mortgages. I was always told you should be able to write your business model on a side of A4, I could write it on a post it note. Our business is as simple as that.
"We're also able to take a long-term view, there are times when we don't have to play because we're not looking at quarter-end figures all the time. All I have to justify is that the society has a sustainable future."
The Cambridge's head office contains around 160 members of staff and, despite me visiting on a cold February afternoon, is buzzing with activity. Underwriters, product teams, admin staff and executives are all housed in the same building, something Mitcham says is a big strength.
"Someone from downstairs can walk into my office and say there has been a shift in the market and we can then talk to the product team and do something about it.
"Last year when banks stopped lending and building societies piled in it was because we were all flexible enough to do that. We retained customer faith and we had still been taking in deposits so had enough money ready to lend out."
But that increase in lending also had its downside for the Cambridge. Last year the mutual found itself stranded at the top of the best buy tables and was forced to leave the intermediary market midway through the year.
Tracy Simpson, intermediary sales manager, tells me that call volumes increased five-fold during this period and the society was left with more cases than it could handle.
"We tried to do it in a gentle way, rather than simply closing our doors," she says of the temporary withdrawal from the market.
"We made brokers aware of what we were doing and allowed them to talk to us. Some of the larger lenders just shut the door on them and say ‘that's it'.
"We just felt totally overwhelmed. We couldn't even get to a point where we could re-price loans as everyone else was pulling out.
"The trouble wasn't doing that level of business, it was managing it. Our team were talking to brokers about cases that we'd had for five days and hadn't been able to look at, which is something we never do."
Simpson says that her phone team were vital in keeping brokers aware of the situation. Housed in the corner of the office, they're located right underneath a monitor showing current call volumes and weekly figures.
The aim is to answer all calls within 12 seconds. The current waiting time when I take a glance at the board? 11 seconds. Although the team joke is that brokers tend to enjoy a Friday afternoon on the golf course.
"We used to visit brokers' offices, but we've found that brokers increasingly don't want that," says Mitcham.
"They want someone they can talk to, somebody who rings them up and is short, sharp and concise and they can ring if they ever need anything. That has been a definite change in the broker market, it is much more business-like."
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