Building society bosses bullish about the year ahead

New research from the Building Societies Association (BSA) shows that an overwhelming 95% of building society CEOs are confident about the year ahead and are predicting similar levels of lending and saving to that seen in 2006.

It also reveals that the building society sector is likely to see greater diversification over the next year and is looking to develop their intermediary channels.

The trade association’s annual survey, now in its third year, questions CEOs about a range of issues. Key findings include:

Nearly two thirds (64%) of CEOs think building society net advances will rise

Nearly three quarters of CEOs (74%) think net receipts will rise

The majority of CEOs think 2007 will end with Bank Rate at 5.5% or 5.75%

While the average prediction for house price inflation was a 5.5% rise over the year

62% of CEOs said they would look to diversify in 2007

Before the Government’s announcement this week, Home Information Packs did not attract one positive comment and 61% of CEOs think they will have a negative impact on introduction, although this is thought to be short-term

89% of CEOs thought the voluntary Home Condition Reports would not be commissioned by consumers

The buy-to-let market is given the thumbs up, with 79% of CEOs saying that they think the market is sustainable, although worries were expressed about city centre developments reaching “saturation” point.

We asked CEOs about the challenges they face over the coming year. Responses ranged from dealing with an increasingly competitive market place and the need to cut cost bases; to even more regulation. CEOs were bullish about the opportunities which lie ahead, noting maximising their mutual advantage, first time buyers, equity release markets and new technology platforms, as areas for potential.

Commenting on the survey, Adrian Coles, Director-General of the BSA said:“This survey shows that building society CEOs are confident about facing the challenges of today’s mortgage and savings markets. They have strategies in place to grow their business and are looking to make mutuality even more relevant through member participation. From first-time buyers to older people looking to release equity societies are developing products to help those members make the most of their money.

“In terms of the economy, CEOs are confident that, although there are signs that the market is slowing, this will not equate to any kind of “crash”. Indeed, they predict that business will continue to be steady, that the buy-to-let market is sustainable and that house prices will still rise but at a more realistic rate.”