It was obviously heartening to read the recent research from Moneyfacts which revealed that building societies were outperforming banks when it comes to mortgage rates.
The independent comparison site compared the mortgage offerings of building societies versus banks and found the average rates on offer from building societies more competitive than their banking peers.
For two-year products, Moneyfacts found the average fixed mortgage rate from banks is 2.78%, compared to an average rate of 2.54% for building societies.
This pattern continues with five-year products, with the average five-year fixed rate mortgage from banks at 3.51%, compared to an average rate of 3.21% for building societies.
As Moneyfacts pointed out, local building societies are offering a genuine alternative to banks, and for consumers it advised to look closer to home to get the best mortgage deal – something we’d clearly agree with.
A quick look at the overall lending figures shows many borrowers and intermediaries already are.
In Q1 2015 building societies approved over 91,000 mortgage loans, a 32% share of the 287,000 mortgage loans approved across the market in the period.
Gross mortgage lending by building societies was £12.7bn, accounting for 29% of the £44.5bn total mortgage lending in the UK.
And when it comes to overall net lending building societies have provided the vast majority.
From 2012 to the end of Q1 2015, building societies have had net lending of £44bn, compared to just £6bn across all other lenders.
The key thing for intermediaries is that it’s not just sheer volume or attractive rates where the UK’s 44 building societies deliver.
Many of our members also employ greater flexibility when it comes to providing finance for clients who, over the last five years, have become hard to place.
One example is lending to older borrowers, a topic where the BSA is leading on a project covering the barriers, products and opportunities for this increasingly important demographic.
While there is more work to be done, what we have already found is that many of our members already lend to borrowers with either age caps well into retirement, or none at all.
The chief reason behind this is that many manually underwrite which gives them greater flexibility whether they are lending to those in retirement, self-employed or borrowers building their own home.
However, just as they don’t use a tick-box approach to their underwriting, in some instances the same will hold true about how they engage with brokers.
Taking time to get to know the building societies in the market and the type of lending they are looking for could pay dividends for you and your clients.