The Future Demand for Mortgage Finance

It was emphasised in Chapter 2 that the mortgage market has been characterised by increasing competition during the 1980s. Building societies lost their previous near-monopoly position as banks, foreign banks, insurance companies, and new wholesale funded specialist mortgage lenders entered the mortgage market. In spite of this increased competition, however, building society net mortgage lending grew by 72.45 per cent over the period 1980 to 1986 as the demand for mortgage finance increased strongly and building societies maintained an average market share of 73 per cent over the period. Although building society net mortgage lending did decline from £19 541m to £14 588m during 1987, reflecting a decline in market share from 73.5 to 50.4 per cent over the year, this can be attributed largely to restrictive regulation most especially with respect to wholesale funding. As building society legislation becomes progressively less constraining, however, building societies will be in a stronger position to defend their market share in the mortgage market, albeit in an increasingly competitive environment.