Over the past month I have had the chance to spend time with many people across the building society sector, first at the new Building Societies Show held in Coventry and then at the Building Societies Association (BSA) conference in Edinburgh, and I have come away with a clear sense that this part of the market remains in both rude health and, just as importantly, clear about its purpose.
The Building Societies Show was a new addition to the calendar and the level of broker attendance told its own story, because advisers do not give up their time unless they see real value, and there was a steady flow of conversations about criteria, underwriting and how societies can help place cases that do not fit a narrow mould.
There was also a strong sense that brokers continue to see mutual lenders as a vital option for clients who may well need a more considered and individual approach.
The BSA conference in Edinburgh offered a different but equally useful view, bringing together senior leaders, policy voices and partners across the sector, and it was striking how consistent the message was around stability, discipline and a continued focus on first-time buyers.
It was also, on a personal note, a chance to reconnect with many familiar faces and to have some honest discussions about where we go next, which is always the real value of these gatherings.
Resilience backed by sound lending
Recent research into the sector underlines much of what was discussed at both events, because despite the backdrop of economic pressure, cost of living challenges and a housing market that is sensitive to rate expectations, the overall credit position of building societies remains robust.
Strong underwriting standards and generally lower LTV lending have continued to support performance, while arrears and impairments remain low by historical standards.
That does not mean there are no risks, as affordability constraints and the prospect of softer housing activity will test all lenders to some degree, particularly those with a clear focus on mortgages, but the combination of solid capital positions, stable retail funding and a cautious approach to risk has provided a meaningful buffer.
Profitability may ease from recent highs as competition intensifies and funding costs stay elevated, but on a risk-adjusted basis it remains appropriate and sustainable.
What stands out, and was echoed in many conversations I had, is that societies have not been drawn into chasing volume at the expense of quality, and that discipline is likely to serve them well as conditions shift.
Supporting first-time buyers remains central
One of the most encouraging themes across both events was the continued commitment from societies to first-time buyers, because in a market where deposits are hard to build and family support is not always available, access to higher LTV lending remains critical. Building societies have long played a leading role here, and that has not changed.
From our perspective at Qualis, where a large proportion of our lender clients are mutuals, we see first-hand how private mortgage insurance can support this effort by helping manage risk and ensuring societies can continue to offer products at higher LTVs. That balance matters, because without it many would-be buyers would simply be locked out of the market.
There was also a clear recognition that borrowers are not all the same, and that a more individual approach to underwriting can make a real difference, particularly for those with complex income or non-standard circumstances, which is an area where societies continue to stand out.
Looking ahead as I step back
As I prepare to retire later this summer, it is reassuring to see the sector in this position, because while the market will always have its ups and downs, the core strengths of the building society model remain intact. The focus on members, the approach to risk but with an innovative flair, and the willingness to support those trying to move from renting into ownership are not new ideas, but they are as relevant now as they have ever been.
There will be challenges ahead, from economic uncertainty to ongoing affordability pressures, but the conversations I have had over the past few weeks suggest a sector that is realistic about those challenges and well-placed to deal with them.
If anything, the current environment only reinforces the need for lenders who are prepared to look beyond a simple tick-box approach and to back that up with strong fundamentals.
For those reasons, I left both shows with a good deal of confidence that building societies will continue to play a vital role in the UK mortgage market, and that their commitment to supporting borrowers, particularly first-time buyers, will remain a defining feature of the sector for years to come.
