Building societies drive mortgage market growth

Building societies drive mortgage market growth

Building societies accounted for more than half of mortgage market growth and increased their mortgage lending by all measures in the first quarter of this year, according to new data.

The Building Societies Association reported a combined loan book of £327.1bn at the end of March 2019 — up 8 per cent on the £303bn recorded last year and representing a 23 per cent share of the overall mortgage market share.

Gross lending for the quarter also increased by 6 per cent to £16.7bn for the three months to March, a 27 per cent market share, while net lending jumped 14 per cent to £4.9bn and accounted for 57 per cent of the market.

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More than 120,000 consumers took out a mortgage with a building society in the quarter — up 6 per cent on last year and a 33 per cent market share — and almost 25,000 of these borrowers where first-time buyers.

A spokesperson from the BSA said building societies had experienced success across the piece but stressed there was a current emphasis in terms of demand from the remortgage market and first-time buyers.

The spokesperson also said lending to older borrowers was growing — but from a comparatively small base — and the building societies were well represented in buy-to-let lending and on self and custom build properties.

Further research from the BSA in its Reinvigorating Communities report showed that 68 per cent of building society customers felt their society was an important part of the community (compared with 47 per cent of big bank customers) while 76 per cent of consumers preferred to do business with organisations that supported the communities in which they operated.

Building societies showed they were keen to remain active in the communities they served as of the 25 societies surveyed by the BSA, almost 9 in 10 said they would maintain or increase their branch network over the next 12 months.

Robin Fieth, chief executive at the BSA, said: "Building societies continued to grow their market share in both the savings and mortgage markets in the first quarter of the year.

"There hasn’t been much growth in the mortgage market over the last few years, but homebuyers are evidently turning to building societies more often when securing mortgage finance. 

"In the first quarter of the year, societies accounted for over half of the growth in the market.

"Building societies understand that people can have complex needs and that sometimes a more personalised approach to mortgage lending is required."

Andrew Montlake, director at Coreco Mortgage Brokers, said: "Although the larger lenders are splashing the cash where low interest rates are concerned, building societies have been continuing to carve out their niches where criteria is concerned. 

"Whether this is lending to older borrowers, those with more complex income sources or even ex-pats there are a whole range of reasons why smaller building societies can assist clients where the big boys cannot.

"Although we are starting to see this change with more risk appetite coming from the high street lenders, at present there is still an important role for building societies to play and long may that continue."