The mortgage market has changed considerably over the last 20-25 years. Up until that time the main lenders were the Building Societies which, as mutual institutions, gave preference to their members, or to those who had savings invested with the Society. The market is now almost unrecognizable from those days of only a quarter of a century ago.

The prime lenders are now:

Banks

Where once the Banks had a very low profile in the mortgage market place, they now actively and aggressively encourage this type of business. As larger institutions, they are able to acquire funds cheaper and improve profit margins. By virtue of their large existing customer base, they know which would present a low potential risk and therefore, who to target for their services. A mortgage customer is, potentially, a long term customer, often 25 years or more, which gives an ongoing opportunity to cross sell a wide range of financial products - insurance, life assurance, pensions etc. Some of the larger traditional Building Societies have acquired bank status in recent times.

Building Societies

Building Societies have the longest history in the provision of property acquisition loans having been around since the late 18th. century. They set out as mutual institutions owned by the members and quickly established themselves in the industrial parts of England during the industrial revolution. It was only in 1986, with the passing of the Building Societies Act, that the societies were permitted to diversify from lending only on freehold and leasehold property into other areas such as banking services and unsecured lending. Of their total lending portfolio, 75% must still be for residential mortgages but should they convert to PLC status they may operate with the same freedom as the banks. As we know, many have opted to do so. Most Building Societies, however, still remain as specialist lenders to the residential market.

Specialised Mortgage Houses

In the main these are limited companies that are either independent mortgage providers or are subsidiaries of larger financial institutions such as banks. These companies developed out of the growth years of the late 1970s and early 1980s and are funded primarily from the wholesale market. They operate on a centralised basis, often with few or no branches.

Insurance Companies

Traditionally life companies have enjoyed only a small sector of the mortgage market, the prime target being the sale of related products such as life assurance, endowment policies, pension plans etc. Some companies were heavily involved in the sale of top-up mortgages. This occurred where a Building Society would only be prepared to lend a certain percentage, say 80%, of the purchase price. If the borrower required a loan of, say, 90% of the purchase price the life company would advance the balance by way of a top-up. As the mortgage business has intensified and become more competitive, the insurance companies have lost ground. However they still have a huge and significant role to play in the provision of mortgage related products.

Finance Houses

These companies, again often subsidiaries of the major banks, have offered finance facilities for home improvements, house extensions, conservatories etc. and enjoy a particular niche in the 2nd Mortgage, secured and unsecured loans arena.

There is one thing common to all the lenders. The trading attitudes of the friendly societies, providing a service to their members now rarely exists. The prime motivation is now profit. Profit for the shareholders, for the members, for the companies and, through their incomes and employment packages, for the directors and employees.

It would be naive to continue to believe that, by agreeing to grant us a mortgage to enable us to purchase a property, the lenders are doing us a favour out of some charitable sense of helping their fellow man! It is up to us therefore to treat these negotiations as we would any other trade transaction and that means - shop around, haggle, seek advice, read the small print. In other words, do not be hassled into making a quick decision that involves any kind of commitment.