Prior to the Birmingham Municipal Bank's commencement as a 'Savings and Housing Bank' on September 1st 1919, enquiries were being received at the Bank's Council House Head Office regarding loans for the purpose of purchasing a house. The publicity regarding the new Bank's powers, unique for a savings bank, to provide house purchase loans was generating early interest. This interest would have been an aspect of the increased demand for working-class houses created by the end of the First World War ("Homes fit for Heroes") and the passing of the Housing, Town Planning, &c. Act, 1919, (the "Addison Act") that provided Government subsidies to help finance the construction of new houses.
This article provides details of how the Bank's House Purchase Department began in 1919 with little knowledge or experience of this type of lending to grow to the position in 1927 as described by J P Hilton in Chapter 14 of his book Britain's First Municipal Savings Bank.
The basis for the administration of the Housing Department was specified by the Bank's Rules 62 to 78, and in advance of the Bank's commencement, the Management Committee had made some decisions and introduced procedures regarding how it would administer its mortgage advances. However, many policy decisions had to be made as applications were actually received and processed, and to cater for situations arising during the life of the loan.
After visits by the City Treasurer and the Bank's Manager (J P Hilton) to Bolton, Burnley, and Ilford, the Bank had chosen to adopt the system used by the Bolton Co-operative Society - a system that calculated the monthly interest charge on that month's outstanding balance. This decision on the basic system to be used was supplemented by the expertise of the City's Treasurer and Town Clerk to provide financial and legal advice - the Town Clerk (in his role as Solicitor to the Bank - Rule 65) producing a form of Mortgage Deed. In addition, the Bank had the professional experience and expertise of the members of its Management Committee who were actively involved in decision making at every level. It was the Bank's Finance and General Purposes (F&GP) Sub-Committee who initially had the authority to approve such advances as they thought fit.
At a meeting of the Bank's General Management Committee on August 29th 1919, the Manager reported "that he had received numerous enquiries with reference to the Housing side of the Bank, and your Sub-Committee have authorised him to have a small circular printed which would be suitable for issue to persons making enquiries on this matter". By this date, presumably, a House Purchase Application form would have been designed and printed, perhaps copying a format used at Bolton. Many years later the Bank was using a very simple form (MB 44) for mortgage applications; this form asked no questions regarding the applicant's amount of earnings and security of employment, suggesting that the Committee relied on limiting loans to 80% of a conservative property valuation as a means of minimising risk. The Committee may well have thought that conformity with the Bank's Rules, numbered 62 to 78 ("Additional Rules as to Housing Department"), was the only criteria required.
It appears that no effort was made to recruit staff with experience of this type of lending, though it is doubtful much experience existed with home ownership being unusual - only about 25% of homes in England were owned by their occupiers just after the First World War. It seems likely that various officers administered early applications, amongst other duties, and put them before the Committee for a decision. Arthur Taylor (appointed Chief Clerk at Head Office in February 1922) and Harold Carver seem to have been involved at a later date as a joint report by the Chairman and J P Hilton in June 1924 stated that:
The House Purchase business is substantially greater than was the case twelve months ago, and divided as it has to be under present conditions amongst so many officers does not give one confidence. The conclusions we have reached are that the House Purchase Department should be concentrated under a Chief Clerk, and it is accordingly recommended that Mr Taylor should resume charge of that Department and thus free Mr Carver to devote more time to the accounts, statistics and various other duties.
Arthur Taylor's annual salary at this period was increased from £290 to £400 by annual increments of £37, £36, and £37, commencing April 1st 1923.
At this date in 1924 the Bank's Head Office functions were still located within a restricted portion of the Council House, but it appears that the house purchase work was now conducted within a "House Purchase Department". In the following year the Head Office was relocated to 6 & 8 Edmund Street, but these premises were still inadequate for the rapidly expanding work of the Bank, and the House Purchase Department took up rented accommodation at 44 Easy Row. Up until April 30th 1924, all repayments on mortgage accounts had to be made at Head Office; after that date mortgagors were allowed to make repayments at Daily Branches, thus relieving the Head Office of the work in handling some of these transactions.
At its first meeting (on September 22nd 1919) after the Bank commenced business the General Committee noted that "four applications for advances in respect of the purchase of houses had been received". Two of these applications were for houses outside the City and consequently could not be considered. The other two applicants were being processed, but at the date of the committee meeting, a property valuation had only been received for one of these. As a result, the first loan to be granted by the new Bank was for the sum of £440 to a Mr Frederick Hiscock for the purchase of 276 Pershore Road, Edgbaston. Mr Hiscock had applied for £480 towards a purchase price of £660. A Market Value of £550 had been provided by Mr S J Lancaster, the Superintendent Valuer of the Birmingham Overseers, acting for the Bank. The amount of the load offered (£440) complied with the Bank's Rule 63 of limiting loans to 80% of the valuation. The rate of interest to be charged on the loan (Rule 68) was "One Penny per Pound per Month" ie a rate of 5%. Mr S J Lancaster had been appointed the Bank's valuer at a fee of 10/6d (52½-pence) per house for houses valued up to £500, and a fee of 15/-d (75-pence) per house for houses valued at over £500.
It appears that, as the number of mortgage applications escalated, Mr Lancaster was assisted in his valuation work by some of his colleagues at the Birmingham Overseers.
The question of authorisation of mortgage applications was considered by the F&GP Sub-Committee, and it reported its deliberations to the General Committee on October 9th 1919:
Your Sub-Committee have considered the question of making advances to prospective house purchasers. In the majority of cases it is essential that the advances should be made without delay and your Sub-Committee consider that, having regard to the rules governing the making of advances, whereby advances shall not exceed 80% of the market value of the property and shall be repayable within 20 years, these applications might with advantage be left in the hands of the Manager to deal with. They therefore recommend that the Manager be authorised to consider urgent applications for advances in respect of house purchase and that he be given authority to make advances in accordance with the rules of the Bank, reporting to your Committee from time to time such advances as are made by him, subject to the proviso that any applications of a special nature are submitted to the Committee for decision. They also recommend that a general instruction be given to the Acting Town Clerk to prepare mortgage deeds in all cases in which the Manager makes advances.
The General Committee agreed with the Sub-Committee's recommendation and passed the appropriate Resolution (numbered 344). However, at their meeting of January 5th 1920, the General Committee rescinded that decision and decided to instruct the F&GP Sub-Committee to appoint a small Sub-Committee to deal with future house purchase applications. In due course, two Sub-Committees (known as 'House Purchase A' and 'House Purchase B') were appointed consisting of Alderman Lovsey, and Councillors Appleby, Fryer, and Tiptaft (A); and Councillors Appleby, Gelling, Keatley, and Ward (B). The constitution of these two small Sub-Committees was agreed by the General Committee on November 15th 1920 when it was also decided that the two Sub-Committees would meet on alternate Mondays at noon. In practice, the meetings appear to have been held on a flexible basis as the demand for loans fluctuated, with their decisions being reported to the General Committee from time-to-time. The Sub-Committees reported on applications dealt with; policy recommendations; and miscellaneous issues.
The F&GP Sub-Committee's next recommendation to the General Committee occurred on December 1st 1919 under the heading 'Advances for House Purchase to Married Women':
Your Sub-Committee have had under consideration the question as to whether, where applications for advances for house purchase were received from married women, it was advisable for the husband to be made a joint party to the Mortgage Deed. It was pointed out that cases had arisen where a married woman had desired to purchase a house in her own name.
Your Sub-Committee are of opinion that as a general rule no advance should be made to a married woman for house purchase unless her husband is a joint party to the Mortgage Deed; if objection be raised to this course by the intending house purchaser the case is to be brought before this Sub-Committee for decision. They recommend your Committee to issue an instruction accordingly.
The General Committee agreed with the Sub-Committee's recommendation and passed the appropriate Resolution (numbered 375). This policy was slightly relaxed in the case of a Mrs Bullivant (June 20th 1921) to whom an advance of £320 for 20 years had been authorised subject to the usual requirement as to the husband joining in the Mortgage as surety. Mrs Bullivant now asked that this requirement might be dispensed with as she was obtaining a divorce. The Bank acceded to this request subject to the Town Clerk being satisfied as regards security.
In addition to the listing of applications, short individual reports from the Town Clerk were also reproduced in the minutes stating when a mortgage was completed. The following example (dated January 5th 1920 re Minute Number 344) relates to an application by a married woman:
69 & 71 George Street, Lozells.
Mortgage - Ensor
I have to report that in accordance with the above Minute, I have completed a Mortgage from Mrs Annie Alice Ensor of the above property to secure the repayment by her of the sum of £88 and interest. The husband of the Borrower has joined in the Mortgage Deed to covenant for the repayment of the money.
At a later date, as the volume of loans increased, these individual reports were replaced by lists. This example, for the meeting on July 5th 1920, shows the first part of the Town Clerk's list of 62 cases:
Further summarisation of applications followed, with the 'A' and 'B' committees merely reporting (for example in January 1921, by Sub-Committee 'B') that:
Your Sub-Committee have since their last report held two Meetings and have had before them 27 applications. Advances were granted in 23 cases and 4 applications were adjourned for further enquiries to be made.
Later still, a House Purchase Advance Book was introduced, so that the minutes would simply record that the book "was submitted, giving particulars on pages 30 to 38, inclusive, of advances granted in 267 cases since the last meeting of this Sub-Committee."