How The Cambridge Building Society’s new chief executive, Peter Burrows, aims to make a difference
The new chief executive of The Cambridge Building Society says he is keen to give more people a helping hand on to the housing ladder through innovative initiatives.
Peter Burrows, who is stepping up from finance director, tells the Cambridge Independent he is “hugely excited and not a little daunted” to take over from Stephen Mitcham in the role.
And he intends to continue the work begun under the ‘Making the Difference’ banner during Stephen’s watch to support those for whom owning a home is tantalisingly out of reach. .
“The Cambridge Building Society is 170 years old in January. We have a very good history and my job is to give us a flying start into the next 170 years,” he says.
“Stephen was CEO for 12 years and was chair of the Building Societies Association for a year at the end of his time here, so is a tough act to follow.
“I’ve had a bit more than three years as finance director to learn how the organisation ticks and particularly learn about the numbers, which is a good platform.”
In the last few years, the mutual has grown its mortgage book by more than a third, begun refreshing its store network with a modern new look and launched projects inspired by its founding principles.
“Our original purpose, like all building societies, was to help local people have a home.
“We’ve tried to think about a modern-day reincarnation of those principles,” says Peter.
Among them is The Cambridge’s First Step Mortgage. Designed to aid first-time buyers, particularly those who cannot rely on the bank of mum and dad, it requires a deposit of just two per cent. The product has a salary cap, and geographical restrictions, and applicants must be a referred by a member of The Cambridge.
“These schemes are designed for people for whom owning a home is visible but just out of reach and we want to give them an extra helping hand.
“I want us to do even more of that and make it a real differentiating factor for us.
“Most recently and most excitingly, in April we launched our Rent to Home scheme,” says Peter.
As the Cambridge Independent has reported, this initiative – believed to the only one of its kind in operation – has enabled two lucky applicants the opportunity to rent refurbished flats above The Cambridge’s Great Shelford branch under favourable rent-return arrangements.
“We charge a market rent, but we put that market rent to one side. If within three years, the individuals are ready to buy a house, we give them 70 per cent of that rent back towards a deposit. The 30 per cent covers our costs,” explains Peter.
“It’s targeted at first-time buyers and there is a salary cap. We’ve started small and we are learning from that. We have ambitions to make that into a much bigger and wide-ranging scheme.”
This could mean The Cambridge will acquire more property, or partner with other organisations on the programme.
“A few people have said to me: I don’t know how you make money out of that. My response is: We’re not doing it to make money,” says Peter. “Like the First-Step Mortgage, we’re trying to do it as a benefit for people in the community.”
This thoughtful approach to the challenge of helping people to secure a mortgage in an area of high house prices extends to its under-writing process.
“One of the key things we offer is that we still employ a team of human under-writers,” explains Peter. “People may not realise but typically if you go to a larger mortgage provider, your information will be put through a credit scoring spreadsheet and if the wrong number pops out you won’t get a mortgage, whereas we will look at people’s cases individually. Around Cambridge there are plenty of people with unique circumstances – self-employed people, for example.
“We will make an individual assessment of a person’s circumstances and we often find ourselves willing to offer a mortgage where other may not be quite so willing. But if you look at our record of write-offs and arrears and we are still doing better than the market average, so it’s not as if we are taking more risks. By employing a team of dedicated specialists who look at individual circumstances, we can support people.”
The Cambridge’s mortgage book has swelled to £1.3billion following a strong period of growth.
“The mortgage book has continued to grow but deliberately more steadily – about eight per cent this financial year. We grew the business by a third in three years,” says Peter, a chartered accountant by trade, who read maths at Oxford University.
While the business remains strong, he acknowledges that it is a challenging time for the industry.
“If you look at the volumes in the mortgage market nationally, for example, it is literally at half of where it was,” he says. “There is a lot of competition out there.
“In 2015, the average fixed rate mortgage was 3 or 3.5 per cent. Now we are at 2 or 2.5 per cent. We’ve got a two-year fixed rate mortgage at 2.29 per cent. That thinning down of margins creates some pressure. But it will take more than some short-term volatility to stop us.
“It’s hard to say Brexit hasn’t had an impact, but who knows the precise extent versus other factors.”
The opportunity, however, is to broaden The Cambridge’s boundaries through brokers, who account for about three-quarters of mortgage business.
“In a sense, we are a well-kept secret,” says Peter. “We’ve done most of our mortgage market in the eight counties around Cambridge.
“We will always be an organisation with our heart in Cambridge. But there is no reason why, with the successful track record and the good business we’ve got, that we can’t begin to push our boundaries.”
About 20 per cent of the mutual’s lending goes to first-time buyers, while slightly more goes to over-60s – a growing market for mortgages.
“We are supporting people later in life, whether it’s remortgaging, an extension, or releasing equity in the house,” says Peter.
“People are living and working longer. They may take out a mortgage at 60 and be thinking they will pay it back in five or 10 years.”
With low interest rates continuing, savers have become used to relatively low rates of return for a decade.
But Peter notes: “If you are prepared to lock your money up you can get better rates.
“We’ve got a five-year fixed rate bond at 1.85 per cent, which is a fair bit higher than a few years ago. We offer 1.45 per cent for two years.
“We offer our savings products online as through our stores. People see as a long-standing, safe place to put their money and an organisation that genuinely cares about them.”
The store network remains important to The Cambridge, which successfully piloted a clean new look in St Ives, and has extended that to its new central Cambridge store and, in July, Great Shelford. Ely is currently being refitted, with the aim of reopening before Christmas.
“We’re trying to give the stores a cleaner, more modern feel. We recognise that customer demand for transactions in stores is falling, along with the rest of the market, customers still value being able to come in and talk to somebody about the more unusual transaction, so we’re repositioning our store network around advice and guidance,” says Peter.
The stores also offer members a chance to try The Cambridge’s digital platforms, such as its app. For the first time, the majority of the building society’s transactions are now completed online.
But while embracing the future, The Cambridge intends to hold true to its traditional values.
“As a mutual we are ultimately owned by our customers. We want to treat customers fairly and get the right outcome,” says Peter, a father of two teenage daughters, and keen runner and cyclist.
He had a career with Ernst & Young and with Aviva in the UK and mainland Europe, before “finding his calling” in the mutual sector. Prior to joining The Cambridge in 2016, he was a finance director and then chief executive of a mutual insurance business.
While he has not been in the city long, he is mindful of the pressures on it.
“It’s a beautiful, amazing city but the challenge is to preserve the historic beauty of an amazing city but recognise it’s also a 21st-century economic success story. Blending those two is very difficult. The two issues that always come up are housing and transport,” he says.
Expect The Cambridge to continue its support for good causes, through fundraising or volunteering, along with its backing for Arthur Rank Hospice’s Bridge the Gap walk.
“We pick a different group or charity every quarter,” says Peter. “We’ve supported YMCA, Wood Green and Tom’s Trust this year and we’re just starting on Cambridge Re-Use, which I think is an amazing charity. They help people on low incomes ‘make their living space feel like home’. Our people enjoy getting involved. We are an organisation of people who genuinely like to give something back to the community.”
Stephen said of his successor: “I am delighted to be able to hand over to an internal candidate who is well versed and understands the values that underpin the way the society deals with customers, business partners and team members.”