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A building society is a mutual organisation owned by its members - its savers and borrowers - and not by shareholders. Its traditional purpose has been to lend money to individuals to purchase or remortgage their homes. This money used to come exclusively from individual saving members paid interest on their deposits. Now, an increasing proportion of funds is raised on the commercial money markets.
Since the early 1980s there has been a progressive relaxation of the rules governing the sources from which building societies may raise money for lending. It was an attempt to allow societies to compete more effectively with banks and other specialised lenders.
Last Updated: May 2007 © Moneyextra.com
Our senior editor Robin Amlôt recommends you should consider taking independent financial advice before acting on any article. Please contact us for help with your individual circumstances if any assistance is required.