THE nation’s credit crunch has led the Newbury Building Society to place restrictions on its mortgage lending after being saturated with requests for loans from homebuyers. The board of directors recently decided that only people living locally (within a 40-mile radius of Newbury), or existing Newbury Building Society customers, will be able to borrow money from the company to help them purchase a property.
As the money market is increasingly reluctant to lend banks the cash to enable them to offer long-term mortgages, typically for up to 25 years, desperate homebuyers are flocking to small, independent building societies to try and snap up a deal before buying a house becomes an impossibility.
The Newbury Building Society has existed for 152 years and sources its cash for mortgage lending from its 40,000 customers who hold savings accounts with the company, rather than borrowing from the money market.
Director Geoff Knappett said that the small building society is becoming “inundated” with new customers.
“It has been new customers who have not got any kind of relationship with the area,” he said.
“The local building society has always aimed to lend money to local people. Our business objective is to provide housing finance to people who we serve, mainly from Newbury, Hungerford, Thatcham and Wokingham, but we’ve never felt the need to restrict it to that.”
He explained that approximately 90 per cent of lending goes to local people anyway, but this has, for the time being, changed so that everyone wanting to borrow money must have local connections.
Mr Knappett said: “Banks stopped lending to each other, that put the price on the money up and the availability went down as well.
“Large organisations cannot get money from the money market and people cannot get money from them (large organisations) so they are seeking out smaller organisations like us.”
He said the average house price for the local area is now so high that most customers need to borrow about £120,000 to buy a house.
The society currently has about 5,000 borrowers.
Newbury Building Society has nine branches in Newbury, Thatcham, Hungerford, Wokingham, Abingdon, Didcot, Whitchurch, Andover, and Alton. |
