Mortgage‐pricing determinants : a comparative investigation of national, regional and local building societies

Abstract

Presents the results of an empirical study that investigates comparatively the mortgage‐pricing determinants of national, regional and local building societies. Considers and discusses the importance of the three main generic strategies (focus, differentiation and cost leadership) and building societies′ main pricing objectives – profit margins, market share, and mutuality. The findings suggest that building societies′ mortgage pricing is influenced primarily by internal industry determinants – such as “costs” and “competitors′ prices” – and to a lesser extent by market‐related factors (customers′ perception of value and elasticity of demand). A large majority of building societies view profit margins, rather than market share, as their primary pricing objective. In order to facilitate this pricing objective, societies select strategies that match their size and market characteristics. Local building societies employ primarily a focus strategy, while national and regional building societies aim at achieving their profit margins mainly through differentiation and cost leadership strategies.

Citation

Meidan, A. and Chin, A.C. (1995), "Mortgage‐pricing determinants : a comparative investigation of national, regional and local building societies", International Journal of Bank Marketing, Vol. 13 No. 3, pp. 3-11. https://doi.org/10.1108/02652329510082960