Data released this week by the Building Societies Association revealed that gross lending by building societies in the second quarter of 2017 reached £16.1bn, up from £15.9bn in the same period last year, and giving mutuals a market share of 26%.
In total, building societies now hold outstanding mortgage balances of £292bn, a 22% market share.
David Hollingworth, associate director at L&C, said he did not believe that borrowers differentiate between mutuals and banks when it comes to arranging a mortgage, as they simply want the best deal.
He added: “The building society is a broad church and as such, meets the needs of lots of different customers. The smaller building societies can be a really important part of a broker’s arsenal, as they have the ability to be a bit more individual in their approach.
“Or there are mutuals like Leeds which have recognised there are niche areas where they can help; holiday lets for example, which Leeds has a dedicated product for, but which some other lenders won’t even consider.”
James Mole, head of mortgages at Gingko Independent, said that dealing with regional building societies was often more straightforward for brokers.
He continued: “I would say the smaller building societies are easier to deal with than the big banks. They are usually fairer with their lending criteria and if something isn’t clear cut, they often make common sense decisions. The big banks on the other hand are often very rigid in both their criteria and their flexibility.”
Martin Stewart, director of London Money, said that this flexibility meant that smaller mutuals were well positioned to pick up the business “that falls off the large lenders’ ‘one size fits all’ conveyor belt”, adding that his firm have a number of deals with mutuals at the moment which big banks would not consider.
He added: “The risk to using these lenders though is that the service standards are susceptible to volume or holidays and a case may move through their system at a glacial pace. That said, if no one is going to lend otherwise and provided client expectations are managed from day one then what may at times feel like an underwrite of death can soon turn in to one of joy if an offer is produced.”