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Home > Mortgages > Mortgage Data

Mortgage lending by mutuals overshadows banks: BSA

A 53.8 per cent increase in lending over the past 12 months to May is evidence mutuals are open for business, the Building Societies Association has claimed.

By Marc Shoffman | Published Jul 12, 2012 | comments

The trade body’s latest lending figures showed gross mortgage lending by building societies and other mutual lenders was £2.8bn in May 2012 compared with £1.8bn in May 2011.

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

Mortgage approvals by mutuals were also up 67 per cent in May compared with 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 almost a quarter of lending from mutuals was to first-time buyers.

He said: “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.”

Despite the positive figures, the latest BSA Property Tracker, showed confidence among homebuyers was being dragged down by the eurozone crisis.

It found 32 per cent of homebuyers are now less confident about the UK housing market because of the eurozone uncertainty. Another 34 per cent said this crisis is causing them to fear for the security of their jobs.

Brian Murphy, head of lending for national advisory firm Mortgage Advice Bureau, said: “Lending from building societies has really spearheaded the increase in mortgage lending in 2012. The mutual sector has continued to bring competitively priced and innovative products to market, and this has been reflected in its strong start to the year.”

However, other advisers have claimed building societies are being just as cautious as banks on lending at the moment, particularly on interest-only products.

Jane King, adviser for London-based Ash Ridge, said: “Bank and building societies are being equally cautious about lending on interest-only, which is now down to 50 per cent loan to value.

“Some lenders, such as the Co-Op, are withdrawing from this type of lending altogether.”

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