24 Nov 2024

Building societies take ‘locals only’ stance

Moneyfacts research reveals that the savings market is changing shape, yet again. Only this time it is not the accounts that are changing but how you obtain an account.

Building societies under pressure from the Government’s Funding for Lending Scheme are reverting back to being ‘local’ or ‘regional’ only providers. A strategy most left behind in the ’90s.

Newly 'Locals only'		Existing 'Locals only'
Building Society	Date	City of Derry BS
Ipswich BS	16.11.12	Cumberland BS
Vernon BS	4.12.12	Hanley Economic BS
Dudley BS	2.1.13	Progressive BS
Loughborough BS	3.1.13	Source: Moneyfacts.co.uk
Tipton & Coseley BS	9.1.13
Source: Moneyfacts.co.uk

Out of 47 building societies, just over 19%, or one fifth, are now only open to local residents. (Earl Shilton BS, while not entirely local only, has limited transfers into its cash ISA to existing members only as of 2.1.2013).

Sylvia Waycot, financial expert at Moneyfacts.co.uk, said:

“Building societies are under pressure to provide good rates of interest on savings accounts as they traditionally rely on the savings to fund their lending.

“However, the Funding for Lending Scheme has removed the need for many of the high street lenders to chase savers’ money as they once did, causing them to reduce savings rates.

“This has led to building society rates shooting to the top of best buy tables and inadvertently causing floods of interest from phone and internet accounts reminiscent of the old carpet bagging days.

“The small building society market now appears to be closing its doors to wider custom and reverting to its roots of supporting local communities by providing savings and mortgages to specific post codes or number of miles from a branch or insisting that business is only carried out in branch.

“Whilst this is good news for locals, at a national level, it does add another layer of frustration to savers searching for the best rate, especially as many consumers seem to have more trust in building societies even though money is just as safe in a bank.”

Moneyfacts Group

Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Think carefully before securing other debts against your home, your home may be repossessed if you do not keep up repayments on your mortgage.

Go Direct.co.uk is a trading style for website purposes of Go Direct UK Ltd.

Go Financial Services is a trading style of Go Direct UK Ltd which is an appointed representative of Personal Touch Financial Services Ltd which is authorised and regulated by the Financial Conduct Authority. Registered in England & Wales Company 5703224. FCA Number 456600

We normally do not charge a fee for mortgage advice, however this is dependent on your circumstances. Our typical fee would be £349