Mortgages  

Harpenden earns mutual respect

Harpenden Building Society was founded in 1953 when the village was in the middle of a post-war housing crisis and in desperate need of financing. The building society has remained an integral part of the area’s development ever since.

According to its current chief executive, Paul Marsden, a group of entrepreneurial locals were responsible for its formation after each paid £5000 into a pool of funds to help people set up shop in the village. In the end the plan paid off and, as Mr Marsden points out, the struggling village has now expanded into a prosperous centre that has reached, population-wise, its full capacity.

Mr Marsden replaced the long-serving general manager, Mike Reed, six years ago. Mr Marsden is full of praise for his predecessor, whom he claimed transformed the mutual’s balance sheet from £1m to more than £100m during his 37-year tenure. Mr Marsden is indeed immensely proud to be leading the financial institution into its 60th anniversary.

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Irrespective of adjustments at the top and the massive changes that have swept through financial markets since 1953, changing products and circumstances have not distorted the building society’s original core values, said Mr Marsden.

“The society already had a particular structure in the way it lends and the principles that were put in place back in 1953 have remained since,” he said. “For example, we still offer nothing over 75 per cent LTV and a bespoke approach that includes individually underwriting each case and not the tick-box approach of the high street banks.”

Such an approach, he added, has helped beat off competition from high street banks and steered the building society through the financial recession. Although Mr Marsden, a regulatory accountant who worked for investment trusts in London, first joined Harpenden in 2001 as finance director he did not become chief executive until the start of the recession.

On taking the reins during this tricky time, he said: “I took over as chief executive in January 2007, but my old boss didn’t actually leave until after the annual general meeting in April. I had about three months at best before Northern Rock went bust.

“We found it really straightforward to navigate through the recession. We have a model that we stick to and during the recession we have never fallen lower than the top 6 for profitability of our assets in the sector.

“Our margins are administered, so basically we manage them. They do not track any movements in the base rates and that has enabled us to remain profitable during the recession. Being able to control our interest rates as far as possible is a massive benefit.”

Mr Marsden also emphasised the importance of the building society’s network of local high net-worth clients and how it is able to outmanoeuvre the high street banks through its more personal offerings and focus on specialist mortgage products. He added: “Most investors and savers are looking for competitive rates in a low-interest rate environment and if you have a fair offering and don’t have rates that fall off a cliff because they are on restricted terms, the trust builds.