MortgagesMay 8 2013

Buoyant mutuals deliver boost for lending – BSA

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Following a positive February for the sector that saw a year-on-year increase in lending of 29 per cent to £2.5bn, the BSA said lending during March rose to £2.9bn with the market share for mutuals rising to 25 per cent, up from 23 per cent in February.

Building societies approved a total of 30,495 mortgages in March, up 12 per cent compared to March 2012, and up 26 per cent on the 24,294 loans approved in February.

Adrian Coles, director general of the BSA, said the increase in lending had been a feature of the sector’s performance for 18 consecutive months, and reflected the fact that mutual lenders “remained open for business”.

He added: “This is further evidenced that mutuals have been punching above their weight in the provision of higher loan-to-value ratio loans. Of all the mortgage products available to borrowers with a deposit of 10 per cent or less, 51 per cent are available from a mutual lender.”

Mr Coles said recent reports from the Bank of England in the past few months showed net lending by banks and other mortgage providers had been negative or marginal and attributed this to the need for them to “restructure their balance sheets”.

Key points

• Gross mortgage lending by mutuals in March was £2.9bn.

• Net mortgage lending – gross lending minus repayments – rose from 0.8bn in March 2012 to £1bn in March 2013.

• Mutuals approved a total of 30,495 mortgages in March, up 12 per cent year-on-year, and up 26 per cent on February 2013.

Statistics

12 per cent – year-on-year rise in mutual mortgage approvals

25 per cent - rise in mortgage market share for mutuals

Industry View

Sean Oldfield, chief executive of Castle Trust, which offers investments based on UK house price returns, said: “The recovery of the mortgage market since 2009 is as much a story of the strength of building societies while they have adapted and innovated as it is about the retrenchment of the bigger banks.

“Increased availability of funds through the Funding for Lending scheme is helping to boost the mortgage market as a whole but there remains a real need for further innovation to help unblock the housing market in support of government schemes such as FirstBuy and HomeBuy.”

Adviser View

Ben Speed, IFA for Derbyshire-based advisory firm Oviso, said: “The mutuals are offering a sensible approach to lending criteria and take applications into account on an individual basis.

“They have a better appetite for lending and are offering more niche products at higher LTVs, such as the Mansfield Building Society which is offering a 95 per cent mortgage for first-time buyers and home movers which has definitely helped the market locally.

“I can see mutual market share growing further as people get turned down by the banks and seek advice from firms like ourselves who can help fund those high LTV products. Mortgage guarantees from the Help to Buy scheme will also provide an added stimulus.”