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The University of Southampton
Southampton Business School

Coventry Building Society

Coventry Building Society consulted Southampton Business School when it wanted to create an effective tool to analyse the profitability of its portfolio of mortgage products.

Professor Lyn Thomas built a computerised pricing model that could take account of many variable factors in the home loan market in different economic circumstances. Simpler models already exist but often do not include complex risks from defaults, falling house prices or changing loan to value figures. There are also differences in the profitability of buy-to-let and self-certification mortgages.

“Mortgages are long-lived products, often lasting 25 years, and much can happen over the life of the loan,” Lyn explains. “We used data from the last 10 years provided by the building society’s analysts to make the model as comprehensive as possible.”

Coventry Building Society Mortgage Risk Manager Sandy Mehra adds: “Professor Thomas’s wealth of experience and knowledge about credit-related issues has been instrumental to the delivery of this project. His ability to combine commercial good sense with intellectual input and academic rigour was important in achieving a successful outcome.”

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