MORTGAGE MARKET REVIEW

The FSAs recent discussion paper on the future shape of the UK mortgage market is a sobering read.Restrictions on self cert lending and fast-track loans alongside an increased focus on "toxic" combinations of risk and on granular checks on affordability are a predictable regulatory reaction to the perceived shortcomings of lenders and intermediaries. Lets not be coy; a review is necessary. There have been significant failures in the mortgage market, an absence of risk-pricing and over-supply of easy credit.A review is needed to understand what happened and to make sure the big mistakes are not repeated in future. BUT the UK mortgage market was not uniformly flawed nor was it full of failed business models. The market has been innovative, competitive and effective in helping many people buy their own home. The review is timely but it needs to take a proportionate and measured view of the mortgage market, so that a healthy baby is not hastily despatched with the bathwater. My hope would be that we all learn lessons from the events of the past 2 years but that we also acknowledge the value in the choice, competition and diversity in the UK mortgage market so that a refreshed market emerges rather than the unintended consequence of restricted customer access to suitably tailored products.

FTSE ON THE MEND?

Whilst few people are claiming that the UK economy is on an inevitable pathway toward sustained recovery , the FTSE index has given us plenty recent signs of optimism. The FTSE 100 index has actually risen by just over 50% since its low level in March this year and in the most recently reported quarterly growth figures investors have seen gains of over 20% in just 3 months, the best quarterly performance in the FTSEs 25 year history! Of course the damage done to stock markets around the world by the credit crunch and recessionary conditions means that the base point of comparison is a low one, but that doesn't alter the fact that recent investors in FTSE stocks have had a very fine 2009. This compares very starkly with the historically low interest rates on traditional savings accounts.Of course the risks and rewards are different when you compare a building society account with a FTSE related product and that is why anyone contemplating an investment in the latter should undertake a full fact-find with an Independent Financial Adviser(IFA) to establish the most suitable portfolio based on their risk appetite. But clearly our customers will want help in weighing up all their options and so I'm proud that The Hanley is one of only a handful of building societies with its own subsidiary IFA business (Hanley Financial Services) so that our members and customers can get exactly that sort of professional,trustworthy advice. Retail savings from high street providers can co-exist with FTSE linked investments.......the link is the customer need and the provision of independent financial advice.

FTSE ON THE MEND?

BSA DEPUTY CHAIRMAN

Last week I was privileged to be elected Deputy Chairman by fellow members of the Building Societies Association Council. The present Chairman is Graham Beale the Chief Executive at Nationwide so I'm delighted to be in such exhalted company! My brief will be to assist the Chairman in promoting and protecting the interests of the building society sector during this period of seismic change in our financial landscape. Specifically I want to represent small,local building societies whose franchise with customers remains very strong despite the turbulence in financial markets and whose traditional business model should be nurtured and strengthened , and certainly not damaged by the inevitable regulatory focus which will (rightly) emerge as a consequence of the demise of some of our larger UK banks. Small building societies have a key role in providing choice and distintiveness in our marketplace .If the credit crunch and the recession have taught us one lesson it should be that big isn't necessarily beautiful. What matters is the quality of a business and it's proximity to customers needs , not it's asset-size, and that is another great reason for mutuals to be optimistic about thriving in the emerging new financial services world.

HAPPY NEW YEAR

For historical reasons our financial year begins on 1st September, which makes us unique amongst UK building societies where most favour a match with calendar year-end in December or tax year- end in March. However, we quite enjoy being different, especially as this will give is the chance to display how well we have hurdled over the various barriers that 2009 has presented us with. This week we'll spend many hours crunching the final figures for our year just gone but we already know that we have much to be proud of in generating a strong surplus (profit) and continuing to cut our costs. We've completed less mortgages than in previous years but that wont surprise anyone, given the fragility of the housing market and our reputation for avoiding risky lending.We've also lost some retail balances to the part-nationalised banks, which is a bit galling as they've been able to use taxpayers subsidies to artifically inflate their interest rates on some accounts. But our strong local membership remains intact and our tremendous confidence in a bright future for The Hanley is undiminished. In fact our annual report and accounts for year ending 31/08/09 will confirm that we are a strong, local building society in fine fettle, well-prepared for the inevitable challenges of the coming year and beyond. A very happy new year to all Hanley members and to all our future customers.

"TRANQUILITY BASE,THE EAGLE HAS LANDED"

I was 10 years old when Buzz Aldrin announced that Apollo 11 had landed on the moon surface and Neil Armstrong took those small steps and giant leaps. I remember the fuzzy TV images and the sense of wonderment that men were exploring another planet. Forty years later we can reflect on perhaps the most theatrical example of mans scientific progress and also the most amazing testimony to the fulfillment of a politicians pledge. President John F Kennedy had promised in 1961 that America would reach the moon and return it's astronauts safely to earth. In our current era where pledges and manifestos are less like tablets of stone, more like pillars of chalk,it is hard to know where JFK got his sheer ambition and bare faced cheek! Maybe part of the answer is that he was a true leader, a statesmen and a man with purpose to match his vision. It's hard to see where our generation of leaders will plant their flag. In 40 years it would be a revelation to think that 2009 was the junction point where bold intentions on climate change, 3rd world poverty or cures for cancer were implemented and not just talked about.

A LANDMARK DAY

This really is a landmark day for The Hanley Economic Building Society. Today we are moving to our brand new, tailor-made head office at the other side of Festival Park. It's not a long distance to travel ( we can even keep the same postcode) but it signifies our optimism and ambition for our future as a thriving local, independent mutual. It is invigourating to demonstrate our belief in this great business at a time when so many others in our marketplace are having to retract and to limit their future-planning. The new building is a contemporary,open-plan design with an emphasis on spatial and energy efficiency, and ease of access for customers and staff. We have been in our current building since 1992 and the market environment for all building societies has changed markedly in the years since then but my sense is that the next few years will see an equally radical change in the financial services landscape.However The Hanley is very well placed to seize the opportunities that change inevitably brings, and we will relish the chance to continue demonstrating our strength as a business with local roots and a modern verve.
But just for today our main task is transporting boxes and setting up our new home.