Why has the Newcastle Building Society released a new range of mortgages?
Not only do all of these products have very good interest rates but they also have high loan to values of 80%, making them attractive and accessible to the widest possible number of consumers in the market.
Until this week only one of their mortgage products featured in any of the mortgage best buy charts and that was in the category of long term fixed rate mortgages. This product has even seen its rate cut by 0.1% to 4.89% and the product fee has been lowered from £994 to £588. The fees for other products are all in line with other mortgages in these categories.
So why have the Newcastle Building Society launched this assault on the mortgage market? Is it that they have the funds available to capture more mortgage customers at a time when other providers are less willing to offer such deals? Or are they looking to bolster their income in light of the turmoil in the mutual building society sector which in recent months has seen an unprecedented number of “mergers” (takeovers)?
In my opinion it is the latter as it has been rumoured for quite some time that the Newcastle is ripe for a takeover. Due to the recent consolidation in the market it is unlikely that the Newcastle has the critical mass to survive on its own. In addition to that the smaller targets that the Newcastle could have taken over to protect itself from takeover have already been swallowed up by other societies.
The obvious choices for who would be looking to take them over have both recently been involved in takeovers of other building societies, Yorkshire Building Society is in the middle of taking over Chelsea Building Society and the Skipton Building Society has only just completed its acquisition of the Scarborough Building Society.
My money is on The Skipton, they are ambitious and they are about to come in to ready cash from the sale of one of their other businesses. But I suppose it is a case of watch this space. The only thing for certain is that this period of mergers, takeovers, acquisitions and consolidation in the mutual building society sector is far from over.
The only possibility of survival the Newcastle Building Society has is to acquire or merge with at least two other building societies and fast. The Cumberland would be a good choice and could add some required synergies in terms of geography but they better be quick.
By: Malcolm Murphy
About the Author:
My name is Malcolm Murphy and for many years I have worked in the consumer finance industry here in the UK. The last 4 years have been spent working as the Head of Online Sales for a financial research company supplying banking data to many of the UK’s leading consumer finance websites. During this time I have learned all of the tricks used by other consumer finance websites.
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Filed under Finance by on Jan 13th, 2010. 