Rate war threatens existence of mutual

As mortgage rates continue to sit at their all-time low, business levels amongst mutuals has fallen according to a recent financial institutions survey.

The leading report revealed that the difference between the fortunes of the banks and building societies has widened, as mutuals have seen a downturn in new business, with the reported falls in the last three months of 2014 being greater than the gains.

When combined with the near collapse of the Co-Operative Bank – which was one of the biggest mutuals before private equity firms stepped in to help in 2013 – concerns will surely be raised over the diversity of the nation’s lenders.

The struggle may have been caused following the Mortgage https://www.beaconfinancialtraining.co.uk/wp-content/uploads/2020/06/cemap-online-and-classroom-training-uk.jpget Review (MMR), which saw tougher affordability criteria and further lending regulation imposed, making life difficult for mutuals. The increasing regulation, which was designed to reduce the risk of any future financial crisis, could be unfairly impacting on our mutual societies.

The leverage ratio makes lenders erect a safety net to soak up any loan losses that building societies have to deliver, even though they deal in less risky loans. Additionally, they find it more challenging than the banks to raise funds at short notice, as they do not use the wholesale market.

As a mortgage advisor who has passed their exams following their CeMAP training, you will work within the rules and regulations set out by the Financial Conduct Authority and your employer, which will vary slightly depending on whether you operate within a bank or building society.



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