• More mortgage growth than the banks
• More innovative ways to support first-time buyers
• More interest paid to savers than the banks
• Growing share of high street branches
• Customers value their building society more than banks’ customers

The first known building society was set up in 1775 by ordinary working people helping themselves to build their financial resilience and get a home of their own, by pooling their savings and using the money to buy land and build homes. 

Two hundred and fifty years later and building societies are still providing a safe home for people’s savings and using these savings as the means for others to buy a home and creating thriving communities.

Those early building societies were set up and owned by their members. Today, all 42 building societies are still ‘mutually-owned’, in other words they are owned by their customers. 

Being customer-owned means building societies are not driven to maximise profits, instead they make enough profit to keep the organisation safe and sustainable. Additional profits are then invested back into the business which is reflected in their rates, products, customer service and their communities. Their culture, behaviour and decisions are therefore different to banks who must focus on creating profits for their external shareholders rather than delivering value to their customers.

Building societies supporting homeownership

The mutual value is evident when you look at the stats – in the six months to September 2024 building societies grew their mortgage balances by almost £12 billion, accounting for 72% of all UK mortgage growth in the period. 

During this six month period, building societies helped over 63,000 first-time buyers onto the property ladder, showing their continued focus on finding solutions to the challenges facing ordinary working people who aspire to be homeowners. 

Many do this by taking an individual approach to reviewing mortgage applications, rejecting the ‘computer says no’ approach often adopted by banks. Others have innovative products and policies such as no-deposit or very low-deposit mortgages, six-times income mortgages and schemes such as rent to home, all aimed at helping more first-time buyers onto the property ladder.

Building societies supporting savings aspirations

Helping people to build financial resilience and make the most of their money is equally important to building societies as supporting people into homeownership.  

In 2023, building society savers received £2.1 billion more in interest than if they had been paid the average rates offered by large banks. It’s therefore not surprising that in the six months to September 2024, building societies attracted £14.7 billion in cash savings, accounting for more than one-third (34%) of all the growth in UK savings balances.

There are sadly many people in the UK with little or no savings to fall back on, and with more than £250 billion in current accounts earning no interest, many others who have managed to build a savings pot that could make much more of it. The building society sector therefore created UK Savings Week, an annual campaign to help encourage better savings habits, leading to improved financial resilience and mental wellbeing. 

Following the last UK Savings Week, 70% of people who had heard of the campaign had taken, or planned to take, positive action, such as increasing their savings or moving their savings to better paying accounts. Of those who engaged in the week, 26% started saving for the first time.

Building societies supporting communities

Building societies prioritise investing in their local communities and are much more likely to retain their high street branches. Their current share of UK high street branches is 30%*, more than double the proportion they had (14%) in 2012. Many building societies are also adopting a new approach to branches, such as co-locating with charities, community groups and local services, or hosting multi-bank kiosks to provide a community with access to cash deposit and withdrawals after the last bank in town has left. 

No wonder 72% of building society customers said their provider is an important part of their community, compared to just 54% of bank customers.  Building societies’ customers also rate their provider higher on customer service than bank customers rate theirs.

*Doesn’t include the branches of Virgin Money or Co-operative Bank which are now owned by building societies.

Commenting on the building societies 250th anniversary Robin Fieth, Chief Executive of the Building Societies Association said:

“We start our 250th year with a fantastic commitment from the Government to double the size of the mutual and cooperative sector. This recognition that our business model is different and benefits consumers presents a unique opportunity to place building societies at the heart of Britain’s economy.

“Today’s building societies have never lost sight of their purpose. They will continue to tackle the challenges of low household financial resilience and difficulties in achieving and maintaining homeownership with innovative and customer-focused products and services. 

“It feels like this is our time, and I’m in no doubt that there will still be building societies providing a safe home for savings and the means for ordinary people to buy their own home in another 250 years.” 

[ENDS]

Notes to Editors:

Building society history

The first known building society was created in 1775, at the start of the industrial revolution when people were flocking to towns and cities to work but with no similar increase in housing provision many were left living in overcrowded slums. 

Legend has it that the landlord of the Golden Cross Inn in Birmingham recognised the need for better housing for the families in his community. He therefore stuck a tankard on the end of the bar and got his regulars to pool their savings. When there was enough money in the pot, they used it to buy land and build a home, drawing lots to determine which of them would get the home.  They all carried on saving until they had built a home for each member of the group, a life-changing event for those families and their community, and the birth of the first ever building society. 

From terminating to permanent building societies

The original building societies ‘terminated’ when every member had a home of their own. However, in the 1840 some building societies began accepting savings from members who were not necessarily potential homeowners, creating the ‘permanent’ building society that we have today. 

Not only did the building societies enable ordinary working people and their families to live in a decent home, these new homeowners also became landowners which permitted many to be able to vote for the first time.

This simple idea of people coming together to build stronger communities, create greater financial resilience and provide access to homeownership to the masses rather than the elite, remains at the heart of today’s building societies. 

In building societies recent history, some societies deviated from their core purpose and chose a different way of doing business. Between 1989 and 2000, 10 building societies demutualised to become banks. Today not one of those banks is still standing as an independent organisation.

Building societies today

Building societies have total assets of almost £525 billion and together with their subsidiaries, hold residential mortgages of over £395 billion, 24% of the total outstanding in the UK. They also hold £399 billion of retail deposits, accounting for 19% of all such deposits in the UK. Building societies account for 40% of all cash ISA balances. 

With all of their headquarters outside London, building societies employ around 52,300 full and part-time staff.  In addition to digital services, they operate through approximately 1,300 branches, holding a 30% share of branches across the UK.

The Building Societies Association (BSA) represents all 42 UK building societies and both mutual-owned banks as well as 7 of the largest credit unions. 

You can find out more about building societies’ purpose and its impact here. 

Press contacts:
Katie Wise, katie.wise@bsa.org.uk  Tel: 020 7520 5904
Lauryn Willis, lauryn.willis@bsa.org.uk Tel: 0207 520 5922
 
Appendix – Building Society Key Stats & Facts

Building society sector 

• 42 building societies 
• 2 mutual-owned banks
• 26 million customers  
• £525 billion total assets
• 1,300 branches 
• 30% share of high street branches (up from 14% in 2012)
• 52,300 full and part time employees

Mortgages

• 3.5 million families and individuals are currently being supported to buy a home with a mortgage from a building society
• 24% of the total UK outstanding residential mortgages held by building societies 
• £395 billion residential mortgages held by building societies
• 113,000 mortgages to first-time buyers in the 12 months to September 2024
• 307,500 mortgages to first-time buyers (in the last three years)
• Almost half (44%) of all building society residential lending was to first-time buyers
• £11.7 billion growth in mortgage balances in six months to September 2024, accounting for 72% of the mortgage market growth over the period

Savings

• 23 million savers are currently being helped to build their financial resilience
• £399 billion of retail deposits held with building societies
• 19% of all retail cash deposits held with building societies
• 40% of all cash ISA balances held with building societies
• £14.7 billion growth in savings balances in six months to Sept 2024, accounting for more than one-third (34%) of all savings. Savings balances at banks and other deposit takers increased by £27.7 billion in the same period.
• In 2023 £2.1 billion more savings interest paid to their savers than if they had paid the average rates offered by the largest banks

UK Savings Week

• 28% of people hold most of their savings in a current account*
• 15% have no savings at all – equating to 7.9 million people without a safety net*
• 42% with no savings are confident they could start a regular savings habit*
• 70% of people who had heard of the UK Savings Week campaign had taken, or planned to take, positive action, such as increasing their savings or moving their savings to better paying accounts**
• Of those who engaged in the week, 26% started saving for the first time**

*Research conducted by Opinium on behalf of the Building Societies Association via online surveys: Between 23 – 27 June 2023 with a nationally represented sample of 2,000 UK Adults and 21 June 2023 with a nationally represented sample of 2,000 UK Adults

**Opinium, 3rd to 6th Dec'24 online 2,000 UK adults (18 and over) representative of the total population & Opinium, 17th – 20th Sept'24 online 2,000 UK adults (18 and over) representative of the total population            

Customer service

• 93% of building society customers said my provider provides good customer service (87% bank customers)
• 86% of building society customers said my provider offers competitive rates (73% bank customers)
• 72% of building society customers said my provider is an important part of the community (54% bank customers)

Financial resilience 

• 19.8% average Core Equity Tier 1 (CET1) capital ratio at building societies, compared to 14.1% at the large banks