A number of building societies are reverting back to dealing with local customers only, according to a study by Moneyfacts.
The price comparison website found that out of the 46 building societies in the UK, 20% are only willing to deal with customers within a local area, such as those living within a particular postcode, or residents within a certain radius from a branch.
Moneyfacts financial expert, Sylvia Waycot, believes this is a result of high street lenders lowering interest rates on savings accounts. Traditionally, banks and building societies wanted to attract savers to fund their lending, therefore offering high interest rates on savers accounts. However, as the Funding for Lending Scheme has made access to money for lending easier, high street lenders do not need to offer accounts with such high interest rates. As such, building societies are experiencing an overwhelming increase in business as more people look to get the best deal.
This has resulted in some smaller building societies ‘closing its doors to wider custom and reverting to its roots of supporting local communities’ to avoid more business than they can handle. This, therefore, could impact London mortgage brokers who rely on smaller building societies to offer their clients the best deals.
