Rebuilding confidence in the lending market: The role of           UK Building Societies and mutuals      Presentation to ...
Agenda• What are Building Societies?• Perception of financial services and the deficit  of trust• Housing market• Horizon ...
Overview of Building Societies                           (plus the Co-operative Bank)                                     ...
Opportunities•   Mutuals are long-term institutions, well able to withstand short-term    variations in activity•   Curren...
Mutuals: Better customer serviceAn independent survey published in July 2012  showed that Mutuals outscore plc banks on th...
The Economy and                                   Markets• GDP growth around 1% pa• Unemployment rising, inflation falling...
English Household Survey                                     February 2012• Owner occupiers:14.45 million in 2011.Down fro...
Current Market                                                                 Conditions £bn                             ...
Current Market                                                           Conditions £bn                               Net ...
Current Market                                                                    Conditions      £bn              Change ...
Consumer                                                                                                                  ...
Consumer                                                                                                                  ...
BSA Property Tracker• Consumers say that credit conditions have eased  in September• Only 3% of buyers put off from proper...
Recent Performance• Customer preference swings further in favour of  building societies and mutuals• Trust in building soc...
Mortgage Regulation                          Mortgage Market Review•   Final rules expected soon•   Rules will be accompan...
EU Directive on                                                      Mortgage Credit•   Proposed Directive published March...
Government                              Housing Strategy• "Laying the Foundations: A Housing Strategy for  England" publis...
CQS• Lenders welcome schemes from regulators to improve  standards in conveyancing and to tackle fraud by  solicitors.• Th...
New technology and land                                        registration• The consumer journey for buying property in t...
Building Societies AssociationThank you
Rebuilding confidence in the lending market: The role of                   UK Building Societies      Presentation to Work...
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Re-building confidence in the lending market, Working Party on Land Registration UNECE 2012, London, Paul Broadhead

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Re-building confidence in the lending market, Working Party on Land Registration UNECE 2012, London, Paul Broadhead, Head of Mortgage Policy, Building Societies Association

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Re-building confidence in the lending market, Working Party on Land Registration UNECE 2012, London, Paul Broadhead

  1. 1. Rebuilding confidence in the lending market: The role of UK Building Societies and mutuals Presentation to Working Party on Land Administration United Nations Economic Commission for Europe 11 October 2012 Paul Broadhead Head of Mortgage Policy The Building Societies Association
  2. 2. Agenda• What are Building Societies?• Perception of financial services and the deficit of trust• Housing market• Horizon Scan• Falling home ownership• The future of land registration?
  3. 3. Overview of Building Societies (plus the Co-operative Bank) Approx Data 2011• 47 building societies – very large to very small• 50,000 staff (full and part-time)• Just under 2,000 branches• 2,500 ATMs• 20 million investing members• 2.6 million borrowers• £375 billion assets• 75% retail funded• 87% residential mortgage lending• £442 million post-tax profit 2011• 20% of outstanding mortgages & 22% deposit savings
  4. 4. Opportunities• Mutuals are long-term institutions, well able to withstand short-term variations in activity• Current distrust of banks – mutuality, and “localness”, the obvious alternative• Demutualisation failed• High customer service levels – including trust• Even if markets are quiet for now still a huge housing need• Many housing initiatives – self-build, shared ownership/equity, local market knowledge, Housing Hub• On many savings initiatives – ISAs, CTF, JISAs – ahead of the market• Innovative capital instruments
  5. 5. Mutuals: Better customer serviceAn independent survey published in July 2012 showed that Mutuals outscore plc banks on these measures:• Looks after the communities it operates in• Offers reasonable value for money• Customers trust them to act in their best interests• Values the customer• Deals with complaints quickly and effectively
  6. 6. The Economy and Markets• GDP growth around 1% pa• Unemployment rising, inflation falling (except last set of statistics)• House prices stable – but regional variations• Owner-occupation falling sharply – down 0.5% a year from 2003-10. Down 1.4% in 2011.• Private rented sector up from 10% in 2000 to 16.5% in 2011
  7. 7. English Household Survey February 2012• Owner occupiers:14.45 million in 2011.Down from a peak of 14.79 million in 2005• Owner occupiers buying with a mortgage made average weekly mortgage payments of £143 (€177; $229)• Average weekly rent payments of private renting households £160 (€198; $257)• Average weekly rent payments of social renting households £79 (€98; $127)• 59% of private renters and 23% of social renters said they expected to buy a home in the UK at some point.
  8. 8. Current Market Conditions £bn Gross lending, UK400350 363 345300 291 288250 277 254200 221150 160 143 135 141 142100 12050 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012f Historical data: Bank of England, Forecasts: BSA
  9. 9. Current Market Conditions £bn Net lending, UK120100 110 108 101 10180 91 7960 5440 41 4120 12 8 9 10 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012f Historical data: Bank of England, Forecasts: BSA
  10. 10. Current Market Conditions £bn Change in private sector retail balances, UK 90 80 70 77 75 69 68 60 58 58 58 50 40 45 30 33 31 28 28 20 25 10 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012fBank of England, BSA
  11. 11. Consumer DemandNow is a good time to buy property in the UK?60% Agree40% 44% Net20% 20% agreement 0%-20% -24% Disagree-40% (-ve)-60% Jun-08 Jun-09 Jun-11 Jun-10 Sep-08 Dec-09 Sep-11 Dec-08 Mar-09 Sep-09 Mar-10 Sep-10 Dec-10 Mar-11 Dec-11 Mar-12
  12. 12. Consumer DemandPerceived barriers to property purchase Raising a deposit70% 64% Access to sufficient60% mortgage finance 56%50% 53% Lack of job security40% 39%30% Affordability of monthly mortgage20% 18% repayments 12% Concern about future10% falls in property prices0% Stamp Duty costs Mar-09 Mar-10 Mar-11 Mar-12 Jun-08 Sep-08 Dec-08 Jun-09 Sep-09 Dec-09 Jun-10 Sep-10 Dec-10 Jun-11 Sep-11 Dec-11
  13. 13. BSA Property Tracker• Consumers say that credit conditions have eased in September• Only 3% of buyers put off from property purchase have been refused a mortgage previously• 23% of first time buyers are put off buying a property due to a fear of being refused a mortgage• More people think now is a good time to buy a property compared to June 2012.
  14. 14. Recent Performance• Customer preference swings further in favour of building societies and mutuals• Trust in building societies remains solid• Gross lending up 38% in H12012 v H12011• Mortgage approvals up 45%• Lending has grown each month this year on a year on year basis
  15. 15. Mortgage Regulation Mortgage Market Review• Final rules expected soon• Rules will be accompanied by a robust impact assessment• Lord Turner has called for a wide ranging debate on the final proposals BSA messages• Impact assessment must take into account welfare impacts, other regulatory initiatives and impact of specific consumer groups• Debate must be inclusive, not exclusive• Transitional arrangements are critical in order not to disadvantage existing mortgage holders
  16. 16. EU Directive on Mortgage Credit• Proposed Directive published March 2011• Key Concerns: – The inclusion within the scope of the Directive of Buy To Let mortgages – Provision of advice (the text currently suggests that to give advice, lenders will be required to advise on products from across the market) – Pre-contractual disclosure (the potential replacement of the KFI with the European Standardised Information Sheet (ESIS)).• Still a long way to go: – “Trilogue” negotiations have started but this Directive is not a priority – Concerns remain, but there are also some positives – Final vote in plenary session of European Parliament is scheduled for December 2012 but expected to slip.• MMR will not wait
  17. 17. Government Housing Strategy• "Laying the Foundations: A Housing Strategy for England" published in November 2011.• Sets out the problems well, but has limited answers for tackling them.• Focussed on owner occupied and social housing, with shorter sections on the private rented sector.• Much of the document sets out schemes for providing new homes• Of primary interest to lenders are the new Right To Buy Scheme, the NewBuy Scheme and support for self build
  18. 18. CQS• Lenders welcome schemes from regulators to improve standards in conveyancing and to tackle fraud by solicitors.• The Law Society’s Conveyancing Quality Scheme is a good example of how solicitors can flag to lenders that they are experienced in conveyancing and have robust procedures in place to ensure quality. Many lenders are beginning to require CQS or an equivalent standard in order to gain access to conveyancing panels.• Any quality marks must be robustly policed and enforcement action taken against any firms not meeting standards.
  19. 19. New technology and land registration• The consumer journey for buying property in the UK is long and confusing.• The number of professionals involved in a property transaction, the various processes they must go through and lack of automation contribute to lengthy transaction times.• We welcome advances in technology which will speed up the process, improve the consumer experience and help to reduce property fraud.
  20. 20. Building Societies AssociationThank you
  21. 21. Rebuilding confidence in the lending market: The role of UK Building Societies Presentation to Working Party on Land Administration United Nations Economic Commission for Europe 11 October 2012 Paul Broadhead Head of Mortgage Policy The Building Societies Association

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