CREDIT union Scotwest has emerged as a winner in the liquidity squeeze after increasing its mortgage business by almost 60% in the last 12 months, while mainstream lenders have seen their loan books shrink.
It now has more than £5.2m of mortgage business, up from £3.3m last year.
As one of only three unions in the UK to offer mortgages to members it is benefiting from the problems affecting banks which have led to the number of new loans for home buy
ers plummeting to a record low of just under 30,000 last month.
There is also less choice now for borrowers, with Moneyfacts.co.uk calculating the number of mortgages available in the UK dropped by more than 50% in the first half of 2008 to around 3,800.
The Council of Mortgage Lenders expects net lending this year to be half the £55bn reached in 2007.
Although Scotwest only offers two mortgages – a fixed and a standard variable – its rates are now more competitive than many banks and building societies, and its fees are lower.
The average rate of a two-year fix rate mortgage broke through the 7% barrier last week, while Scotwest has held its rate at 6.1%.
Rod Ashley, chief executive of Scotwest, said: "We've had a lot of people coming to us in the last few months who have been turned away by banks or who found they couldn't get a high enough loan to value (LTV) on their deal. We even did a 100% LTV mortgage recently as the customer had been a member for some time."
While credit unions are community-based organisations, Ashley says Scotwest is not just being used by lower-income clients who cannot get access to mainstream banks. While its average mortgage size is around £80,000 it has approved loans for up to £200,000. All its mortgages are underwritten by Scotwest deposits, so it is immune from fluctuations in the wider economy.
Ashley added that he has seen a shift in attitude in favour of unions as customers become more aware of ethical issues.
With assets of around £30m, Ashley said Scotwest is now bigger than the smallest building societies and has returned more than £7m in dividends to members since it launched in 1991.
The full article contains 389 words and appears in Scotland On Sunday newspaper.
