This week Norwich & Peterborough Building Society (N&P) began the task of mailing more than a quarter of a million voting packs to its members in respect of the forthcoming proposed merger with Yorkshire Building Society.
The merger route is not one that N&P has gone down lightly, however the post-crash financial environment has hit the mutual sector hard, and with margins virtually halved in the last seven years, it became clear that decisive action needed to be taken sooner rather than later.
The choice for N&P is to carry on as an independent society and be forced to undertake major cost-cutting measures, including branch closures, or marry up with a partner which gives N&P, its staff and customers a more financially secure and positive outlook.
The latter definitely makes more sense, but the ultimate decision is in the hands of the members and how they cast their votes.
A tie-up with Yorkshire Building Society, the UK's second largest mutual looks a good fit for a number of reasons.
Both societies have a strong commitment to exceptional customer service and are highly valued for their involvement within their local communities, something that will remain a priority if the merger goes ahead.
The enlarged society would have a branch network covering a much larger area of the UK, and would give the Yorkshire the capability of expanding the highly respected N&P current account model to its 2.6 million members.
Also as part of the deal, Yorkshire has agreed to retain the N&P name and 46-strong branch network for at least two years, plus those mortgage customers on the standard variable rate (SVR) with N&P will see their rate fall from 5.35 per cent, in line with the Yorkshire SVR, to 4.99 per cent.
Members can cast their vote online, return their postal votes by 17 August or vote in person at the Special General Meeting in Peterborough on Monday 22 August.
If members vote in favour, the merger is due to be finalised on 1 November.
Yorkshire has already demonstrated its ability to undertake mergers with the recent tie-ups with Chelsea and Barnsley building societies.
Joining forces with an already strong player in both the savings and mortgage markets is something that N&P members will ultimately benefit from as Yorkshire beefs up to become an even stronger financial institution and a real alternative to the profit-hungry high-street banks.
There was some minor respite for savers this week as inflation (CPI) dipped to 4.2 per cent for June, but with nigh on 20 per cent energy hikes on the horizon, this drop will be short lived. It's therefore important to try to get the best return you can on your nest egg.
Among the better savings deals on offer this week is the Online Saver (issue 4) from Post Office paying 3.01 per cent with unlimited instant access, although there is a bonus of 1.36 per cent included for the first year. Also Nationwide BS continues to enhance its range of loyalty savings deals with a new 18-month fixed-rate bond and 18-month fixed-rate ISA, both paying a respectable 3.3 per cent AER.
Saffron uses common sense for first-time buyer mortgages
First-time buyers have been the ones to have suffered most since the banking crisis raised its ugly head and it's likely to be some time yet before this market gets anywhere near back to normal.
The problem for many would-be homeowners is that in the majority of cases their application form is assessed by an automated underwriting process which frequently ends up with the computer saying "no".
Last week, however, Saffron Building Society took a more common-sense approach with its new first-time buyer mortgage, available to those who are currently renting and only have a 5 per cent deposit.
As part of the credit assessment, the lender will check the borrower's credit file as normal, but will also take into account their rental track record, as long as it has been in existence for at least 12 months. With rental costs at record levels, for many people a mortgage will work out more affordable than lining the landlord's pockets
Saffron BS has recognised that there are people perfectly capable of affording the monthly mortgage repayments, but struggling to accumulate a 15 or 20 per cent deposit. The Saffron mortgage is 6.49 per cent fixed until April 2015 and comes with a fee of £195. This means someone buying a property for £130,000 would need a deposit of £6,500, leaving them monthly repayments of £833 on the £123,500 mortgage.
Hats off to the Saffron, any other lenders care to follow suit?Reuse content