The New Markets Open to Building Societies

Abstract

It has been stressed in the previous chapter, and indeed throughout this book, that there are strong arguments in favour of building societies utilising the powers available to them under the 1986 Act and the ‘Review of Schedule 8’ to diversify both their assets and the range of services which they provide. It is most especially important that building societies lessen their traditional reliance upon mortgage lending given: the slim profit margins available in this market; the intensely competitive market environment; and uncertainty surrounding the future growth in demand for mortgage lending. This latter factor is reinforced by the general proposition, alluded to in Chapters 3 and 6, that a more diversified asset portfolio will tend to be less risky than a concentrated portfolio.