Building blocks of N&P success

Norwich & Peterborough Building Society can certainly not be accused of sticking to mainstream lending as it has made a point of differentiating itself through niche products such as self-build mortgages.

The UK&#39s 14th-biggest society says it is keen to hold on to its traditional roots, not least through a firm commitment to mutuality.

General manager Stephen Penlington says: “We are staunchly mutual, which we believe gives us an advantage in terms of having competitive interest rates in mortgages and savings. We have no reason to change.”

But unlike some of its mutual competitors, it offers a range of unusual products, including sterling mortgages for expatriates in Gibraltar and Spain and environmentally-friendly “carbon-neutral” mortgages.

Self-build accounts for 10 per cent of all new business and N&P is confident that it can keep a dominant position in the market despite competitors such as Mortgage Express and Verso coming into the fray.

Penlington says: “We are based in a region where self-build is strong because of relatively cheap plots of land. We have a good position in the market because we invest in staff training. All self-build occasionally runs into problems so it needs someone who understands how each stage works.”

Looking further afield, N&P is expanding its overseas presence by selling sterling mortgages in the south of Spain on the back of its expat business in Gibraltar.

Penlington says: “We have been in Gibraltar since 1990 and now also do business in Spain through the Gibraltar branch although we do have someone based on the Costa del Sol who meets and greets customers.”

Although regulation is less stringent overseas than in the UK, N&P is applying UK standards to Spain and Gibraltar to ensure it faces no compliance problems.

Despite this customer base in Europe, N&P says it has no plans to launch a euromortgage, saying that sterling is a strong currency and that it has not had demand for euromortgages.

N&P has also built up business in commercial lending which now accounts for 10 per cent of its total annual lending.

It claims to be unaffected by the warning last month from FSA chairman Howard Davies that he will be monitoring the performance of a number of societies whose commercial property loans are growing as a proportion of their total loan books.

Penlington says: “Davies was referring to concerns over investments in big blue-chip properties but our prime business is lending to owner-occupied commercial developments. This type of lending is our bread and butter and is a major contributor to the society&#39s profitability.”

Looking at its lending as a whole, N&P sells some products directly, through branches, the internet and its call centre but most sales come through introducers and it has plans to launch a website dedicated to brokers early next month.

This will initially provide details of products and let brokers download application forms but N&P says that this is just the first step and there plans for the whole application process to be completed online.

N&P says it is proud not to have had to deal with some of the service issues that other lenders are experiencing because of the buoyant mortgage market which is causing frustration among brokers.

“We have a central underwriting system and are very careful that we have enough resources in place to meet demand,” says Penlington.

Another sign of N&P&#39s commitment to the intermediary market is its recent decision to join the Trigold trading platform. It is also linked to Mortgage Brain and N&P says it sees a great future in these systems, even if the business they generate is still at a relatively low level.

Penlington says: “At the moment, although introduced business is being sourced electronically, paper-based applications are being submitted. But I think the more brokers get used to technology, the more business will come through electronically.”

He ends on a high note by saying: “We believe we have the structures in place to offer our services any time any place. We have more branches per asset size than any other building society, offer internet banking, a call centre and the old postal distribution route.”

Penlington says N&P&#39s ambition is to double its gross mortgage business over the next few years, saying “the sky&#39s the limit”. This may seem acheivable in today&#39s buoyant housing market but, as industry experts agree, this boom cannot last for ever.