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Home > Mortgages > Mortgage Data

Mutuals lending rose 54% last year, BSA

Data shows that savings balances remain “virtually flat” but lending and mortgage approvals are on the increase.

By Donia O'Loughlin | Published Jul 03, 2012 | comments

Gross mortgage lending by building societies and other mutual lenders rose 54 per cent to £2.8bn in May 2012 compared to £1.8bn May 2011, data from the Building Societies Association has revealed.

In the first five months of 2012, lending rose 40 per cent compared to the same period in 2011. In comparison, bank gross lending for the same period rose 8 per cent and was up 4 per cent in the year to date.

Net lending by mutuals was positive for an eighth consecutive month, reaching £835m in May.

In addition, mortgage approvals by mutuals were up by 67 per cent in May compared to the same month last year, and were 32 per cent higher than the average over the previous six months. Approvals were up 48 per cent in the first five months of the year compared to the same period in 2011.

Adrian Coles, director-general of the BSA, said: “Lending activity by mutuals in May was once again strong. Other data collected by the BSA shows that nearly a quarter of new lending this year by mutuals was to first-time buyers.

“The mutual sector is giving a strong signal that it is open for business to all types of borrower whether buying a property for the first time or remortgaging. Approvals by mutuals were up significantly in May both compared to last year and the previous six months which demonstrates the mutual sector’s commitment to lend in the coming months.”

Retail savings balances at mutuals increased by £240m in May, compared to a net withdrawal of £419m in the same month last year.

Mr Coles highlighted that although savings balances increased in May, after interest credited is removed balances “were virtually flat”.

Mr Coles said: “The current economic climate means it remains difficult for households to save, and the low interest rate environment makes it difficult to attract savings.

“The Monetary Policy Committee may well expand its programme of quantitative easing when it meets later this week. However, one of the policy options it also considered last month was reducing the official bank rate below 0.5 per cent. This would further reduce the incentive for households to save, so could make it harder for all lenders to attract the funds to lend.”

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