by Gary Webber
18. February 2010 09:52
Wales' principal building society approaching its anniversary relatively free of struggles
While many building societies are struggling to balance the demands of savers and mortgage borrowers — with some looking to merge and others simply losing custom to the banks — Principality is one society that looks a little bit different to its competitors at the moment.
Funnily enough, that's because it's still doing most of what kept it going for 150 years. Established in 1860, Principality still lends mainly against its savers' deposits, and sticks wholeheartedly to the mutual society principle.
There's a secret to how Wales' No. 1 building society achieves this, and it's just that: being Wales' No. 1 building society.
It quite simply takes a lot to make the patriotic Welsh go elsewhere. Their savers are less prone to flight than most. Their mortgage customers have stuck with the society on a 4.99% standard variable rate (Nationwide's has been 2.5% for most of the last year).
All this has helped Principality build up an aura of stability, which continues to attract savers (a 6.63% increase in deposits during 2009).
Strong savings deposits in turn encourage competitive mortgage pricing. At the time of writing, Principality is offering a 2-year fixed rate mortgage of 3.89% with no fees — a best buy option for many. Tracker mortgages start from 2.69% (base + 2.19% for two years, with an admin fee of £999) and can accommodate up to 85% loan to value.
Being one of the few building societies to achieve a net savings inflow during 2009 shows that Principality's old fashioned business model has a lot to recommend it. Now mortgage customers as well as savers have special reason to beat a path to their door.
Subscribe