Speaking to this publication, Yorkshire Building Society’s chief executive Susan Allen (pictured), said that the first year had been a “fantastic year”, and it had been “brilliant… learning more about the building society sector”.
“The building society sector is really quite special, and Yorkshire Building Society is a significant national player in the sector. It is a really fascinating business, and what’s been great for me is seeing how we bring our purpose of real help to real life and how that really influences how we think about propositions, the service we offer and how we support our members and customers.”
She pointed to the strong savings performance, with 637,000 new accounts opened, noting that it impacts mortgage performance too as deposits are needed to lenders.
“On the savings side, we’ve delivered better-than-market rates for more than 10 years to our savers, and that’s what gives us the ability to then confidently deploy those funds in mortgages.”
“We are actually owned by our members and that creates a different dynamic, so we don’t have to think about delivering returns to shareholders, we think about delivering returns to members, and £441m, it’s a little bit like some sort of a member dividend.
“It creates a different dynamic too, because when we listen to our members and ask for their input and feedback, we genuinely care because they are owners.
“When they talk to us about the importance of retaining a branch presence, we listen, when they talk about wanting digital so that they can access our services more easily, we listen, and when they talk about the products they need and where they are struggling, we listen.”
More interest going into 2024
Allen said that Yorkshire Building Society was “certainly seeing more interest” coming into 2024, which she attributed to better pricing.
“I think now that we’re starting to see rates dipping below the five per cent, so I think people who’ve been holding off are feeling a bit more confident. Looking at inflation, it is softening a little, so that is also improving confidence.”
She noted that, while there is an uplift in activity this year, it was dependent on the interest rate outlook, adding that the market is expecting to lower rates this year, but there is some uncertainty.
However, she said that, nonetheless, the market would be challenging as there were people who would come off their fixed rates this year who would see a “significant uplift”.
Allen said that one of the key themes coming through from customers was how “challenging it is to save for a deposit”.
“We’re doing a lot more work in our branches and even going into schools earlier to talk about how you manage your finances and how you build financial resilience.”
She added that Yorkshire Building Society also ensures that it has a regular saver on sale to help people save what they can for a mortgage.
The account pays 5.25 per cent if you’re a loyal customer, and if a customer has been with the company for more than a year, it pays 5.75 per cent.
First-time buyers and buy to let key areas
Allen said that the mutual saw opportunity in the first-time buyer market, and that it had been “significantly growing” its buy-to-let (BTL) business.
She said that people having access to “good-quality rental homes” was an important part of the housing market and that its BTL proposition fitted in well with its purpose.
On the first-time buyer side, she pointed to its joint borrower sole proprietor (JBSP) and offset mortgages as two key areas.
“We’re really trying to think about some of those other opportunities to support people into the housing market and into their first home, because we know it’s so important to the economy and to individuals, so there’s quite a lot to do, but we support people at all stages of the housing market, from people who are saving to buy a home to people who have a home.”
Allen said that it tried to focus on “underserved sections of the population where actually people may struggle to get a more sort of mainstream mortgage”.
“I think the team do a brilliant job because they genuinely look at every single case. So, we’re interested in helping the first-time buyers and people moving up the ladder, people downsizing,” she added .
“It is not a machine who looks at our cases, it’s actually an individual, and we also allow our underwriters to have some discretion. Now obviously, like every financial services provider, we have to make sure that affordability is right, so lending people money they can’t afford to repay would not be sensible under any circumstance.
“But we do believe that we can actually take a proper case-by-case view and look at people genuinely as individuals and make decisions based on their individual circumstances, and that’s a really powerful point of difference for us.”
Allen said that there was an education piece to help “people understand the different roles building societies can play both on savings and on mortgages”.
“We are different to the mainstream banks, and this isn’t about bank-bashing views. It’s just about the different business models, but I think there is a job for us to do to really let people know what we can offer that is different.
“The intermediaries and the brokers we work with, I think they understand us very well. I think they do a great job explaining to people how we can be different, and that’s important because there are niches in the market that we can serve really well with principles-based underwriting and common sense lending.”
Mortgage Charter has changed consumer behaviour
Allen said that the Mortgage Charter had led to changes in consumer behaviour, but that a lot of the elements lenders had already put in place.
“I’d like to think that actually many of the things that are in the Mortgage Charter about forbearance, about giving people time, were things that we already would have operated, so we’re really happy to see those enshrined in the Charter and to make sure that people who were struggling get that breathing space.”
She added that the ability to fix a rate six months ahead was important for existing customers and had driven more activity in the marketplace, noting that brokers had said that they had revised cases eight times.
“When the Charter came out, some brokers said they were checking rates kind of seven, eight times. Now they’re saying, ‘well, actually I’ll just wait until nearer the time and then check the rate’. Obviously, that always has a risk that the rates could go up in the meantime, but I think some people are making that choice to wait.”
“We’ve definitely seen more churn or switching as people look around and that’s good, that’s sensible. It’s really important that people get the best deal that they can.”
Allen said that it was “really well-positioned” to benefit from the change in activity, as “we’re offering really strong, best-of rates and great service”.
‘We are very much open for business’
Allen said that it saw its relationship with brokers as a “partnership – it’s not a transactional relationship”.
She continued: “It’s a genuine partnership and we’re interested in long-term partnerships with the broker community, so just like we listen to our members, we listen to the brokers, and we’ve made many changes to improve our processes.”
Allen said that, in the last few months, it had made a number of changes to different aspects of policy based on broker feedback.
“We’re very much open for business. In fact, in the last year we’ve grown with our larger brokers, but we’re also connecting with another set of brokers around the UK that we haven’t been working with previously. So, we’re very keen to build out our partnerships to support more customers and to work in partnership with brokers.”
