Good deals for special requests

Paul Durman takes a look at some small but competitive institutions

The tiny Ecology Building Society has its offices in an end terrace Victorian house in the Yorkshire village of Cross Hills. Only a dozen miles away to the south are the headquarters of the mighty Halifax, though in terms of financial muscle and ambition, the two societies could scarcely be further apart.

Yet, as the Halifax prepares to join the stock market, one could legitimately argue that it is Ecology which is doing most to uphold the original spirit of the building society movement.

Ecology is one of the diminishing breed of small societies that have remained close to the communities they came from. In many cases still capable of competing effectively in the traditional areas of mortgages and savings, most are determined to preserve their independence and mutuality.

Ecology was set up only 15 years ago by a group of environmental activists who were frustrated by the difficulty of raising finance to renovate run- down properties. Most societies would much sooner lend on a new house built on a green-field site, because it is easier to find another buyer if the borrower defaults on the mortgage.

Paul Ellis, general manager at the Ecology, says the society will advance up to 80 per cent of the value of a property, regardless of whether it is currently habitable. In many cases such loans will enable the purchasers to begin renovation work, often leading to a rapid rise in the property's value and allowing the restorers to raise further finance.

Energy conservation and the desire to preserve buildings, communities and the environment remain the cornerstone of Ecology's policy. As well as lending on run-down properties, this means a preference for homes with energy-saving features. This would entail using materials whose manufacture does not cause pollution, or building homes with recycled timber, brick or stone. Customers profiled in the society's newsletter include organic farmers and borrowers who have chosen to do without an environment-harming fridge.

Ecology has grown rapidly and now has 470 borrowers, 5,000 depositors and assets of just over pounds 1m. It originally charged an extra 2 per cent on its mortgage loans, but was able at the start of this year to bring its base rate in line with the rest of the market. It currently stands at 6.99 per cent. Despite the unusual nature of its lending, the society has only ever suffered six repossessions - a tribute, Mr Ellis says, to the society's detailed scrutiny of mortgage applications.

Teachers' Building Society was set up in 1966 when many teachers, and women teachers in particular, were finding it difficult to obtain mortgages. Although times have changed, Hugh Nichols, assistant general manager (operations), says there is still a need for the specialist building society. For example, the society is comfortable lending to teachers on "temporary" one-year contracts, recognising that this is a semi-permanent reality for many working in the profession.

Teachers make up about 95 per cent of the society's 3,000 borrowers. It prides itself on flexibility, knowledge of the teaching profession and its ability to decide quickly on loans. Mr Nichols says: "There's no reason for any teacher to look elsewhere. We know teachers' problems."

The society has accumulated assets of more than pounds 120m, and has 15,000 savers. Its mortgage base rate is 6.85 per cent.

Almost a third of the 1,000 borrowers of the Catholic Building Society are women, two or three times the national average according to Francis Higgis, the managing director. He says this reflects the fact that women are more conscientious churchgoers.

When it was founded in 1960, a building society for Catholics seemed less odd than it may do today. The Church of England Building Society and various Methodist societies have since been swallowed up during the industry's long consolidation. As well as advertising regularly in the Catholic press, the society has in recent years taken a quarter of its funds from advertisements placed in Church of England and Methodist papers.

Based just opposite New Scotland Yard in central London, the society claims to have pioneered free postal accounts during the 1970s. It has assets of pounds 27m. Small as it is, Catholic is competitive on rates. Mr Higgins says the society's average savings rate is comfortably more than 5 per cent, and beats any of the top 20 societies. Its standard lending rate is also well up with the best in the market, at 6.53 per cent.

Of course, most small societies are provincial. The quaintly named Stafford Railway takes its name from the days when Stafford was a big railway town. Michael Heenan, the chief executive, says tourists still occasionally drop in to ask the time of the next train.

For more than a century, Stafford Railway has been run by partners of Dean Statham, the local accountancy firm. Mr Heenan, a former mayor of Stafford, says the society is closely entwined with the town and its business community. It recently stopped accepting small deposits (less than pounds 5,000) from savers outside Staffordshire, a move prompted by the speculative flows of money chasing building societies regarded as "demutualisation" candidates.

The society has 1,500 borrowers, 10,000 savers and pounds 55m in assets. It is still able to offer mortgages at a market-leading standard variable rate of 6.48 per cent.

Mr Heenan says: "We are not trying to break any records, we are just trying to do a good job serving local people."

The attitude of the small societies is expressed simply by Mr Nichols at Teachers' Building Society: "We know our market and we are good at it. We are successful, we are profitable, there's no reason to change."