The international fight against Covid 19 has often been described as a ‘war against an invisible enemy’. Although the first peak of the virus has passed, it has not gone away. The first battle of the war has ended but the conflict sadly goes on. To steal Churchill’s great quote, it could be said that ‘this is not the end…..or even the beginning of the end…..but more the end of the beginning’. The cost to date has been huge both in lost human lives and economic damage. People and businesses are now trying to get themselves up and running again and everyone is trying to cope with the ‘new normal’ whatever that may look like.
The team at Bath Building Society (BBS) has been operating continuously throughout the shutdown to provide key services to its savers and borrowers. All building societies have to prepare business continuity plans that can be put in place in the event of disruptive events occurring such as fires, terrorist events and pandemics. Luckily for us, back in March, our planning was in good shape. This helped us to successfully move all of our Head Office people to home working in a very short period of time. Our Branches have remained open throughout the full lockdown; although their opening hours were reduced to 10am-2pm and a strict ‘one customer at a time’ policy was adopted. We have now extended our Branch opening hours to 9am-3pm and we are hopeful of extending opening hours further once we have fitted improved protective equipment.
BBS’s next challenge was to respond to the sharp reduction in the Bank of England’s base rate. We chose to pass on the majority of that reduction to our borrowers in order to protect them during a period where household incomes were likely to come under pressure from redundancies, short term working, furlough etc.
Our interest rates to savers were also reduced from 1st May although in recent weeks we have increased the interest rates that we pay on children’s accounts, notice accounts and certain business accounts.
The greatest challenge that we have had to deal with has been the processing of mortgage payment deferrals or so called ‘payment holidays’. Up to 31st October, all mortgage borrowers have the right to request payment deferrals and BBS has had to handle several hundred applications for these. Payment deferral discussions with customers are complex and they require investment of much time and staff resource.
The lockdown has severely impacted the short-term income earning potential of many of our borrowers, be they home-owners, landlords or business owners. As a mutual organisation, we believe that it is our duty to give our impacted borrowers as much support as we possibly can during this difficult time. If anyone reading this article is struggling with their mortgage repayments, I strongly suggest that they speak to their lender as soon as is possible so that appropriate forbearance measures can be provided.
The Society has so far had ‘a good war’. Although we have had a few scares, no-one in the team has knowingly contracted the virus. Despite reducing its range of mortgage products, the volume of new applications for its mortgages has remained robust and the level of pre advance ‘pipeline’ business is at near record levels. In the first six months of 2020 the Society has doubled the level of growth in its mortgage book that it achieved over the whole of 2019. So far so good…but what of the future?
I do not have a crystal ball, but I going to predict that there will unfortunately be a painfully large increase in unemployment. That will undoubtedly bring challenges for all mortgage lenders such as increasing arrears and losses on loans. I am also going to predict that interest rates will remain low for the foreseeable future.
Despite some restrictions that have been put on us by the virus, the Society is continuing to progress the development of its products and systems. We have just launched a Regular Saver product for 16-25 year olds that will try to encourage young people to save between £10 and £50 per month by offering a very attractive interest rate of 4%. The Society has also launched the first of a range of planned loyalty products that aim to reward member loyalty with higher interest rates. The Society is also hoping to be able to equip its direct mortgage sales team with a new software tool in the coming weeks that will greatly enhance the service that the team can give to potential borrowers.
BBS remains very much open for savings and mortgage business. If you believe that we can help you in any way, then why not give us a call on 01225 423271.