Despite difficult economic conditions, mortgage lending by mutuals continued to strengthen in August with loans approved up 10% on July.
Both mortgage approvals and gross lending for the year to date are up 16% compared to the same period in 2010. Gross lending is at its highest level for 11 months.
Lending:
- £2.1 billion of mortgages approved by mutuals in August, up 10% compared to July, and up 17% on August 2010.
- 16% rise in mortgage approvals for the first eight months of 2011 at £14.6 billion (£12.6 billion, January - August 2010).
- 8% rise in gross mortgage lending by mutuals in August, up to £2.1 billion from £2.0 billion in August 2010.
- 16% increase in gross lending for the first eight months of 2011 standing at £14.5 billion (£12.5 billion, January - August 2010).
Savings:
- Savings balances were up £0.4 billion in August 2011, compared to a reduction of £0.7 billion in August 2010.
- Excluding interest credited to accounts, mutuals' net receipts were essentially flat in August 2011, compared to a net withdrawal of £1.0 billion at the same time in 2010.
Adrian Coles, Director-General of the Building Societies Association, said:
"Lending by mutuals has held up well over the summer months, and in August gross lending reached an 11 month high. Approval figures continue to look promising as consumers take advantage of the competitive mortgage rates currently offered by mutuals.
"However, the outlook for the economy has deteriorated over the past month as has consumer confidence, which could well spill into the housing market, causing further weakness.
"The amount deposited in savings accounts at mutuals over August roughly equaled the amount withdrawn, meaning there was no additional saving in the month.
"However, this represents a big improvement on August last year when there was a net withdrawal from mutuals of more than £1 billion.
"Including interest that was added to accounts, savings balances increased by £0.4 billion this August, compared to a decrease in balances of £0.7 billion in August last year.
"Labour market conditions continue to be difficult, and inflation relatively high, so the relatively strong levels of savings at mutuals may well reflect households pulling out of equity investments in the face of continuing volatility in the markets."
