Building society

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A building society is a financial institution, owned by its members, that offers banking and other financial services, especially mortgage lending. Building societies exist in the United Kingdom and some other countries.

The term building society first arose in the 18th century, in the United Kingdom, from co-operative savings groups. In the UK today building societies actively compete with banks for most personal banking services, especially mortgage lending and deposit accounts. At the start of 2008, there were 59 building societies in the UK, with total assets exceeding £360 billion.[1] Every building society in the UK is a member of the Building Societies Association. The number of societies in the UK fell by four during 2008 due to a series of mergers brought about, to a large extent, by the consequences of the financial crisis of 2007-2010, three further mergers took place in 2009, and another three mergers took place in 2010 leaving the current number of societies at 49.



The origins of the building society as an institution lie in late-eighteenth century Birmingham – a town which was undergoing rapid economic and physical expansion driven by a multiplicity of small metalworking firms, whose many highly skilled and prosperous owners readily invested in property.[2] Many of the early building societies were based in taverns or coffeehouses, which had become the focus for a network of clubs and societies for co-operation and the exchange of ideas among Birmingham's highly active citizenry as part of the movement known as the Midlands Enlightenment.[3] The first building society to be established was Ketley's Building Society, founded by Richard Ketley, the landlord of the Golden Cross inn, in 1775.[4] Members of Ketley's society paid a monthly subscription to a central pool of funds which was used to finance the building of houses for members, which in turn acted as collateral to attract further funding to the society, enabling further construction.[5] By 1781 three more societies had been established in Birmingham, with a fourth in the nearby town of Dudley; and nineteen more formed in Birmingham between 1782 and 1795.[6] The first outside the English Midlands was established in Leeds in 1785.[7]

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