The virtuous circle of mutuality
A Yorkshire Building Society case study

Page 3: What is a mutual?

A mutual is an organisation which has been set up by a group of people who share a common interest. Traditionally Building Societies were set up as mutual societies. Groups of people would club together and pool their funds in order to build and then buy every member of the group a home. The early societies were known as 'terminating societies' and would disband when every member had a house.

The next step was the development of 'permanent societies' where there were two groups of people - savers and borrowers. Savers put their money into the society and earned interest on their savings. Borrowers took out loans (mortgages) to buy houses and repaid them, with interest added on, over periods of 20 or 25 years.

Yorkshire Building Society | The virtuous circle of mutuality

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