FR: This year marks the 250th anniversary of the first building society. Tell us a bit about the history of the market.
Back in 1775, when most working people were living in overcrowded slums, a landlord of a Birmingham pub got his regulars to pool their savings. When there was enough money in the pot, they bought land and built a home. They kept saving and building homes until every member of the group (the first building society) had a home of their own. It was the start of a model that has since helped millions into homeownership.
Fast forward to 2025, and although building societies have evolved by responding the circumstances of the day, they have the maintained the same purpose, helping people come together to access homeownership and build stronger communities.
Providing homeownership to the masses rather than the elite, remains at the heart of today’s building societies and collectively they play a significant role in the UK mortgage market, particularly for those who may have non-standard needs or circumstances.
Working in partnership with brokers is essential for the sector. Brokers provide borrowers with the tailored advice they need to place them with the best mortgage product for their individual circumstances. Many brokers are familiar with the offering from building societies and will take a deeper dive into the market rather than relying purely on the standard tables. But more could benefit from doing so.
While not every building society will cater for every borrower's needs, it is likely that a product for all borrowers' needs can be found in the building society sector.
FR: It sounds like building societies are offering something quite niche, can you tell me more?
Staying true to their core purpose, building societies have a laser focus on finding solutions to the challenges facing ordinary working people who aspire to be homeowners. They often specialise in real-world challenges particularly for first-time buyers, self-employed workers, older borrowers and those with non-standard incomes.
Many do this by continuing to offer manual underwriting for non-standard and complex mortgage applications. A rejection of the ‘computer says no’ approach taken by many other lenders allows building societies to take a common-sense approach to lending decisions.
Several brokers already recognise that it is often building societies who understand the issues and actively look for innovative ways to overcome the challenges facing homebuyers. The BSA’s latest Property Tracker Report shows that affording mortgage payments and raising a deposit are the biggest barriers preventing would-be homebuyers from getting on the property ladder. Many building societies have found ways to overcome these issues with new products and policy adjustments. Examples include Skipton Building Society’s Track Record mortgage, Nationwide Building Society’s Helping Hand mortgage and Yorkshire Building Society’s £5,000 deposit mortgage. Building societies also lead the way on shared ownership, along with other creative solutions, such as joint borrower sole proprietor loans.
FR: You talk a lot about first-time buyers, do you think more could be done to support them?
Yes. Lots.
Building societies already dedicate around half of their residential lending to first-time buyers, but there’s room and lender appetite to do more. Unfortunately, current regulations often hold back the flexibility needed for them to serve more would-be homeowners.
Our own first-time buyer report highlights that since the financial crisis the pendulum has swung too far towards caution at the expense of the societal benefits access to homeownership provides for many creditworthy families.
Conditions for today’s first-time buyers the toughest in over 70 years, with 2.2 million people who might reasonably have expected to buy a home since the financial crisis having failed to do so.
The FCA and PRA announcements and discussion papers on increasing flexibility for lenders and mortgage borrowers is therefore a welcome step forward.
But regulation and lender innovation is only one piece of the puzzle. We also need decisive action from government on the supply side. The promised long-term housing strategy is overdue, and without delivery of the house building targets improving affordability will remain an uphill struggle.
At the BSA we are committed to working with the regulators, government and lenders to ensure that we have a mortgage market that is innovative, fit for the future and most importantly maintains consumer protection at its heart.
FR: So what’s next for the BSA?
It has been a busy summer, not least because we have been responding to multiple consultations from the regulators. But we are also gearing up for one of the highlights in our calendar, the BSA’s Annual Mortgage Meet-up, which is taking place in London on 25th September.
This event is for anyone working in the mortgage world, from brokers and business development managers to underwriters, credit risk specialists, and senior leaders. It’s a great chance to take stock of where we are, look ahead at where the market’s going, and to hear from experts across policy, regulation, and product development.
As always, the day will include plenty of opportunities to network, share ideas, and connect informally with peers across the sector. Anyone interested in joining us can register here.
