A poll by the Building Societies Association of the chief executive officers of mutuals found that 70% were optimistic about the year ahead.
And while 96% expect the cost of retail funding to rise in 2008 and 90% expect wholesale funding to go up, a number of CEOs report that the quality of their mortgage books means they’re well positioned to tackle any market downturn.
Adrian Coles, director-general of the BSA, says: “The last few months have been uncertain times for consumers and for anyone in the financial services sector.
“Societies have been able to weather the storm partly because they are not as reliant as banks on the international money markets, nor have they been exposed to investments linked to the US subprime market to the same extent as other institutions.
He adds: “The housing market is going to see a slowdown but CEOs still have confidence in areas such as buy-to-let although they see house prices as likely to fall in 2008. This correction in the market is going to be tough but building society bosses are still confident.
“The cost of funding is currently an issue, but should this pressure reduce, chief executives are sure that the benefits of building societies’ competitive products and excellent service will continue to appeal to consumers.”
The majority of CEOs also predict that the Bank of England basel rate will fall to between 4.5% and 4.75% by the end of the year. They’re also confident about the future of the buy-to-let market with 97% of CEOs believing it’s sustainable.
