Q: How is Ipswich Building Society structured?
A: Ipswich Building Society operates through a conventional branch structure but also has a dedicated on-the-road sales team dealing specifically with mortgage intermediaries. Ipswich offers a full range of mortgage products via intermediaries, including tracker, discount and fixed products as well as Right to Buy and buy-to-let. We are also very active in the shared ownership market. This year has been a particularly successful one, gross mortgage lending rose to £82.3m (£49.6m in 2001) and net lending to £36.9m (£17.6m in 2001). We are an appointed representative for Norwich Union in the areas of life and pensions.
Q: What percentage of mortgage business is introduced by intermediaries?
A: About 60% of our mortgage business is introduced to us by our network of intermediaries located across England and Wales. We do not lend in Scotland or Northern Ireland.
Q: What services does the Ipswich offer intermediaries?
A: We offer intermediaries a range of features to make the mortgage process as simple as possible. We do not use credit scoring, all cases are individually underwritten and our approval in principle process speeds up decision times. Intermediaries get to deal with a named contact so we can look at cases that other lenders might turn down.
The society offers very attractive procuration fees, which include the payment of fees for borrowers who want to take out further loans for home improvements. We also pay procuration fees where a borrower reaches the end of a fixed or discounted rate period. The fees range from 0.3% for loans up to £100,000, to 0.4% for loans in excess of £100,000.
Q: Did Ipswich encounter any servicing difficulties in 2002?
A: Like everyone else, the volume of business in 2002 exceeded our expectations. There were times when we were not able to turn business around as quickly as we would have liked. We have overcome those problems by incr-easing resources at our service centre.
Q: Do you find being a mutual makes lending easier or more difficult?
A: Being a mutual definitely makes it easier. We are able to form better long-term relationships with customers because they know that we are not just looking to make a profit out of them. We offer better long-term value because we do not have to pay dividends to shareholders.
Q: What are the advantage of loan portfolio acquisitions?
A: Loan portfolio acquisitions mean we can acquire mortgage assets that are outside our geographical heartland. They allow us to acquire certain sorts of lending without the need to have the expertise in-house. That is a big advantage for us. It takes us into a different market at a much lower cost than if we had to start from scratch. Over the past six years we have acquired mortgage assets from Amber, Future Mortgages, Colchester and Merton councils, and the euro-denominated portfolio of San Paolo Bank's London branch.
Q: Can loan portfolio sales impact on mortgage brokers?
A: There is no detrimental effect of loan portfolio sales on brokers. They retain their procuration fees and still originate for their lender, who may then sell the portfolio to another company. Brokers still have their relationship with the customer and with the original lender for any future business.
Q: Who do you consider to be your main competitors?
A: All national lenders are our competitors. We are competing against lenders irrespective of whether they are mutual or not. Although there are big differences between a mutual and a plc, consumers often don't perceive any. We have commissioned market research in Ipswich that has asked consumers to name the main building societies and they always come up with the names of the banks.
Q: What do you think the future holds for mortgage intermediaries?
A: Good mortgage intermediaries have got a very bright future. But there will be a significant reduction in the numbers of intermediaries as a result of regulation. We reckon about 20% of them will disappear before the end of 2004.
Q: What's on the agenda for 2003?
A: We will be preparing for mortgage regulation. We are changing all our computer systems to offer the best possible service to intermediaries and the mortgage market. Ipswich is looking forward to another year of strong growth in which we hope to match 2002's 40% increase in lending.
Q: Would Ipswich favour a single electronic platform for online mortgage application processing or competition?
A: We are in favour of competition. It is a much better way for the market to operate as it keeps costs down.
Q: What does the Ipswich make of the AIFA/NAMBA alliance?
A: It would be helpful in the marketplace to have one organisation representing mortgage intermediaries. It will provide them with a single and coherent voice when it engages with discussion with the FSA over regulation. One of the real difficulties has been the lack of unity among intermediaries when responding to CP98 and CP146. NAMBA should benefit its intermediary members and lenders too.
Q: What effect does the Ipswich think the Basle II Capital accords will have on midto small-sized building societies?
A: There are some potential threats to small and medium-sized building societies. Potentially the very big lenders, who will be able to adopt an internal ratings approach to risk assessment, might require less capital to finance their operations. Small lenders are not likely to be able to do this and the Building Societies Association has been spurred into investigating how smaller societies could work collectively on their risk weightings.
Q: Is the Ipswich a member of Mutual One?
A: No, but we see this as a good development for small building societies, particularly in terms of compliance. Like-minded smaller building societies can benefit from sharing resources, though this initiative may not be a safeguard against the Basle reforms.
Q: Is enough being done to convince the European Commission to exclude mortgage loans from the proposed Consumer Credit Directive?
A: The Treasury and the government do not realise the importance of this and its potential implications for the industry. The CML is working hard but it needs the government to say it is not prepared to see a coach and horses driven through its own efforts in the UK. This could create huge problems for Building Society was established in 1849 as a mutual society for the benefit of local borrowers and savers. It has staff of 100 located at its head office in Ipswich (pictured above) and at eight branches in Suffolk. It has a dedicated team dealing specifically with intermediaries' needs throughout England and Wales.