The Marketing of Building Societies' Services

The business of Building Societies is readily defined: to raise funds from members and to make advances to members by way of mortgage of property. They operate on a “cost plus” basis, setting the rate which they pay to savers at a level necessary to attract sufficient funds and charging a rate of interest on mortgages that covers tax and expenses and produces a surplus. Apparently they do not charge what the market will bear, and they are reluctant to raise the mortgage rate of interest. Although they compete with each other and strive for commercial efficiency, they conceive of their function as partly a social service, and it is this aspect which justifies the use of the term “the Building Society Movement”. Nevertheless they are part of the financial market of attracting and providing funds placing them in competition with banks, finance houses, insurance companies, and so on.