Have all the windfalls gone bad?

This was the headline used in the Sunday Telegraph on 8 June earlier this year to introduce an article explaining how the value of windfalls made available on the demutualisation of building societies in 1997 had, in its word, “plummeted”.

More generally, in the light of the difficulties of the demutualised institutions, a number of commentators have asked whether demutualisation was, after all, such a good idea.

The Times on 16 June 2008 published a leader in which it commented on the difficulties being faced by banks adding “What is doubly sad is that some of the most battered banks are former building societies – those once prudent institutions woven into the fabric of British life. Northern Rock, of course, is the most egregious casualty. But this week HBOS, formerly the mighty Halifax Building Society, is taking the humiliating step of asking its army of small shareholders for £4 billion in new capital. Bradford & Bingley, Britain’s biggest buy-to-let lender, is the laughing stock of the City after its own botched attempt at raising money. Alliance & Leicester, its shares languishing at one fifth of the level of 18 months ago is being kicked out of the FTSE 100, the club of blue chip companies.”

The Times wondered whether the demutualisation trend of 10 years ago was sensible. “Of itself the move to plc status was harmless. But it had two dangerous elements. It liberated those once cautious building society bosses to diversify into new activities, and provided them with the capital to do so. It also loaded them with remuneration packages so poorly structured that they encouraged short-term recklessness.”

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Deregulation - the real thing this time?

Some of us will remember Michael Heseltine’s ‘bonfire of red tape’ exercise and John Major’s ‘deregulation’ initiative in the 1990s, and the present Government has expounded the cause of deregulation throughout the 2000s. Yet the regulations keep piling up.

The latest initiative with a strong deregulatory flavour is the Department of Business Enterprise and Regulatory Reform’s consultation Consumer law – call for evidence, the deadline for responses to which was 31 July 2008. A wide-ranging consultation, it notes that –

"We have one of the best systems of consumer protection in the world, but our legislation has accumulated over decades and is complex and inflexible."

The Association agrees. Building societies are committed to fair treatment of their members and are concerned that the range of fair play mechanisms in relation to deposit-taking and mortgages in the UK is badly in need of simplification and streamlining. The complexity and inflexibility of the current mechanisms have created a regime that is detrimental to both businesses and consumers.

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BSA research report - 2020 vision

How will mortgage products change between now and 2020? The BSA would welcome your views to assist with research the Association is undertaking to be published this Autumn.

The research will seek to step away from the current market uncertainties, and look at how the mortgage market and mortgages themselves will evolve over the next 12 years. For example, will affordability problems worsen, meaning that first time buyers will continue to get older and pay their mortgages well into retirement, or will current market trends continue and ease affordability pressures?

We would be very interested in your views on this, and particularly your answers to the following questions:-

•  How is consumer demand for mortgage products changing (if at all?) and how will mortgage lenders respond to those changing customer demands?

•  How will the 2020 mortgage deal with the affordability problems that may continue to characterise the housing market?

•  What new products will be offered by lenders, and how will they differ from existing mortgage products? For example, will lenders start to offer products that link savings with future mortgages or ‘rent to buy’ type schemes?

To see the full list of questions please click

here

Mortgage lending in the credit crunch

How can lenders ensure that they have strategies in place to ensure that they are best placed to weather the credit crunch?

The BSA’s first seminar looking at the mortgage market, scheduled to be held in Nottingham on 25 September, is designed to give delegates a greater understanding of what has become a rapidly changing market place, and how they can ensure that their organisations are going to be able to respond.

Issues that will be discussed include topics such as how lenders should adapt their product ranges to reflect the changing housing and mortgage market, how has the credit crunch impacted on the economics of mortgage pricing, how are lenders pricing associated charges, should lenders be making greater use of intermediaries and how can building societies successfully compete against competitors.

As well as speakers from the Chelsea, West Bromwich, Coventry and Stafford Railway building societies, delegates will also hear from the RICS, Moneyfacts, Chase de Vere, Mortgage Advisor and the BSA.

Further details and a booking form can be found here

Is now a good time to buy?

The surprising finding of the first quarterly Property Tracker survey by the BSA was that 27% of people believe that now is a good time to buy a property.

Although 51% don’t think that now is a good time to buy, the findings of the survey clearly demonstrate the sharp division in the population and that despite the doom and gloom of many housing market commentators, it shows that a cadre of people remain willing to buy.

Meeting the monthly mortgage repayment was identified as the biggest barrier to prospective buyers. Getting access to a large enough mortgage or a mortgage at all, raising a deposit and concerns over future price falls also featured highly as potential barriers.  Interestingly, fear of unemployment was seen as an inhibiting factor by only 12% of respondents.

The full findings of the survey can be found here.

Award winning BSA!

For the second consecutive year, the BSA scooped the Trade Association Forum Newsletter of the Year award for Society Matters, our quarterly magazine.

Society Matters' winning attributes, the judges said, were "lots of good writing, influential contributors from the whole world of finance and an admirable spotlight page: a "five minute" Q and A session with a finance personality, very well done."

The Autumn edition of Society Matters, which will focus on building societies at the heart of their communities, can be ordered by emailing the Media centre.

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