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Even The Building Societies Are Feeling The Pain

News that half year profits at the Britannia Building Society have fallen by 36% compared to the same period last year is evidence that the credit crunch is now hitting the Building Society sector where historically the need to squeeze as much profit as possible out of customers has not been paramount. Mutual lenders have grown in popularity over the last decade as the financial restraints were loosened a little by the authorities.

The Britannia is the second largest of the mutuals behind the Nationwide Building Society and news that it was forced to take a £40 million impairment charge due to those mortgage customers at risk of default indicates that the sector is in trouble. It seems as though 2 out of every 100 Britannia customers are falling behind with their monthly mortgage payments and the situation looks like getting worse before it gets better.

One area which is causing grave concern is the first time buyers market and those who were offered near 100% deals. As the financial tide has turned these are the customers who are treading a very thin line between safety and default. One more downward lurch for the economy could push many over the edge and into default.

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