Property: First time buyers should speak to local building society

WOULD-be first-time buyers who feel frozen out of home ownership by high house prices and the mortgage famine should speak to their local building society reports the Daily Telegraph.

This often overlooked option is unlike the high street banks because, instead of being owned by shareholders, these mutual savings and loans organisations are owned by their members. In plain English, building societies are owned by their savers and borrowers.

What that means in practice is that they have managed to retain something resembling ‘business as normal’ despite the global credit crisis, which brought several banks to their knees and forced most to drastically curtail lending.

Last year in this space I reported how building societies were punching above their weight and delivering mortgages to borrowers who had been turned away by banks. Now Adrian Coles, director general of the Building Societies Association, has given me fresh figures that demonstrate the difference between banks and building societies.

For example, he tells me that building societies and Co-op Banking – another financial institution owned by its members – increased gross lending by 30pc last year to a total of £31bn. Despite the mutual sector being much smaller than banks, this gave it a 22pc share of the mortgage market compared to 17pc in 2011.

By the time loan repayments and remortgages are stripped out, building societies grabbed an even bigger share of net mortgage lending; advancing £6.5bn out of a total of £7.4bn net lending in the UK during 2012 or 88pc of the whole.

To hit those figures, building societies approved 281,000 mortgages in 2012 – an increase of 20pc on 2011. About a third of these loans went to first-time buyers and one in five of all mortgages exceeded 90pc of the purchase price or loan to value (LTV).

So, while building societies can do nothing about the risk that house prices might fall in future, they are clearly doing much more than the banks to provide mortgages to would-be first-time buyers keen to take the plunge and escape from generation rent. The super cynics of cyberspace may claim they are all the same evil banksters, but the facts and figures demonstrate otherwise.

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