Building Society lending continues to climb, with July’s gross lending up 44 per cent year-on-year.
According the the Building Society Association, building societies and other mutuals lent £3.1 billion in the month, which also represented a 14 per cent month-on-month rise.
They took a 24 per cent market share of gross lending, up from 17 per cent in July 2011 and up from 21 per cent over the first seven months of 2011.
The future also looks bright for mutuals, with the number of mortgage approvals up 32 per cent month-on-month. Mutuals approved 26 per cent of all mortgage loans in the UK in July.
BSA director general Adrian Coles said: “Mutuals are currently enjoying a sustained increase in lending activity, and an increase in deposits from savers.
“Lending activity by mutuals has been growing strongly on a year on year basis for some time now. Approvals by mutuals were also up in the month and this means that this trend of increased lending is likely to continue.
“The Funding for Lending scheme has not influenced these figures and may not start to for a number of months yet.
“Savings balances at mutuals increased by over £1 billion in July, up considerably compared to the same month last year and June 2012. Whilst this is positive news for mutuals, savings flows are quite variable month by month, and it is difficult to draw firm conclusions from one month’s figures. Growth in consumer prices is still running above growth in earnings and so saving for many households remains challenging.”
Inconsistent
Brian Murphy, head of lending at Mortgage Advice Bureau, added: ““Our National Mortgage Index shows total mortgage activity has been inconsistent this year, but mutuals have consistently offered some of the best rates available. As such it’s no surprise that lending from mutuals now represents almost a quarter of all mortgage lending.
“Looking forward, we are yet to see what impact the two new lending schemes announced by the Chancellor and the BoE will have, and with Santander raising its SVR last week it will be interesting to see which lenders follow suit in the next month.”
Innovation
Legal & General Mortgage Club managing director Ben Thompson said: “Over the last three months especially, Building Societies have really led the market in terms of innovation in mortgage products, and we have seen interesting deals including Leeds Building Society’s two year fixed rate on 80 per cent LTVs, which rivals many mortgages offered with LTVs of 75 per cent and 70 per cent.
“A lot of these products have been aimed specifically at first time buyers, which is where we really need to see a boost if we are to head toward recovery. The mortgage market as a whole needs to be opened up, with lenders moving to accommodate the borrowers who have so far been under-serviced. At the minute, this is largely FTBs and those deemed to be ‘riskier’ customers. Whilst lending rates are enjoying periods of historic lows, it is significantly harder to secure a loan now than it has ever been previously.
“Whilst Building Societies should be commended for the moves they’ve made to stimulate growth in the industry, we still need to see other lenders following suit by moving up the ‘risk curve’ and helping to increase the overall level of lending.”
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