Building society lending ‘stable’

Gross mortgage lending by building societies fell from £1,571 million in March to £1,551 million in April 2009, leading the Building Societies Association to argue that lending in this sector has stabilised, although the figure is still substantially lower that the £3,921 million lent in April 2008.

Paul Broadhead, Head of Mortgage Policy at the BSA said:

“Gross mortgage lending by building societies was £1,551 million in April 2009, a similar level to March, but still 60% lower than gross lending in April a year earlier. Although also at low levels, building society mortgage approvals (which give some indication of future lending activity) were 14% higher in April than in March, after adjusting for seasonal factors. Therefore, the rate of decline in activity in the housing market may have started to slow, but overall the lending environment remains very challenging.”

In the savings market, growth has been observed with the savings balances held by by building societies growing by £80 million in April 2009. Again however, this is still substantially less that the £2,918 million in April last year. This can largely be explained by building societies experiencing a net withdrawal of £811 million in April this year, compared to a net intake of £1,823 million in April last year.

Brian Morris, Head of Savings Policy at the BSA said:

“In the current low interest rate environment there is evidence that households are looking to repay debt rather than save, and it is possible that there will be a net withdrawal (before interest credited) from the total UK savings market in 2009.”

Mr. Morris also observed the competition that has been hotting up among banks and building societies that has seen new mortgage deals introduced, and savings rates begin an upward climb.

“Competition for retail deposits has become more intense since the wholesale markets effectively closed to all financial institutions. However, building societies have accounted for almost half the increase in savings balances in the UK since the run on Northern Rock bank in September 2007 to the end of March 2009. This is because societies have offered attractive accounts and are trusted by savers,” he said.

If you are looking to start saving, or move to a better deal, TotallyMoney.com can help. Visit http://www.totallymoney.com/banking/ now to compare great deals on bonds, ISAs and regular savings accounts. When you’ve decided on the right deal for you, just click Apply to be taken through the application process.