Opinion Former Article

BSA: Mutuals are open for business - Mortgage lending increases in May

Gross mortgage lending by building societies and other mutual lenders rose 54% to £2.8 billion in May 2012 compared to £1.8 billion May 2011. In the first five months of 2012 lending rose 40% compared to the same period in 2011. In comparison, during the same period bank gross lending rose 8% (May 2012 vs May 2011) and year to date was up 4%. Net lending by mutuals was positive for an eighth consecutive month, reaching £835 million in May.

Mortgage approvals by mutuals were up by 67% in May compared to the same month last year, and were 32% higher than the average over the previous six months. Approvals were up 48% in the first five months of the year compared to the same period in 2011.

Retail savings balances at mutuals increased by £240 million in May, compared to a net withdrawal of £419 million in the same month last year. After interest credited is removed there was a net withdrawal of £1 million in May.

Commenting, Adrian Coles, Director-General of the Building Societies Association, said:

“Lending activity by mutuals in May was once again strong. Other data collected by the BSA shows that nearly a quarter (24%) of new lending this year by mutuals was to first-time buyers. 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."

“Savings balances at mutuals increased in May, but after interest credited is removed balances were virtually flat. The current economic climate means it remains difficult for households to save, and the low interest rate environment makes it difficult to attract savings. The Monetary Policy Committee may well expand its programme of quantitative easing when it meets later this week. However, one of the policy options it also considered last month was reducing the Official Bank Rate below 0.5%. This would further reduce the incentive for households to save, so could make it harder for all lenders to attract the funds to lend.”


Notes for Editors:

Mutual statistics May 2012 - data is not seasonally adjusted.

Additional data tables are available on request. 

1. The Building Societies Association (BSA) represents mutual lenders and deposit takers in the UK including all 47 UK building societies. Mutual lenders and deposit takers have more than 32million customers, total assets of over £375 billion and, together with their subsidiaries, hold residential mortgages of nearly £240 billion, 19% of the total outstanding in the UK. They hold more than £250 billion of retail deposits, accounting for 22% of all such deposits in the UK. Mutual deposit takers account for 34% of cash ISA balances. They employ approximately 50,000 full and part-time staff and operate through approximately 2,000 branches.

2. Data in this release relates to 47 building societies and five other mutual deposit taking and lending institutions in the UK.

3. Photographs of Adrian Coles are available from the BSA press office, or from the Association’s website at www.bsa.org.uk or Headlinemoney www.headlinemoney.co.uk

Hilary McVitty
Tel 020 7520 5926
Email: hilary.mcvitty@bsa.org.uk

Victoria Bamber
Press and Publications Officer
Building Societies Association
6th Floor, York House
23 Kingsway
Email: victoria.bamber@bsa.org.uk
Tel: 020 7520 5927 

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