Gross lending by building societies has risen 22% to £16.9bn in Q3 2021, compared with the same period in 2020, according to the Building Societies Association (BSA).
Savings balances at building societies increased by £4.2bn in Q3, three times the increase in the third quarter of 2020.
During the third quarter, societies approved 109,575 mortgage loans, 4% more than in Q3 2020 (105,022).
Building societies were found to hold outstanding mortgage balances of £351.2bn, a 23% share of the total mortgage market.
The data also showed that building societies hold savings balances of £328.2bn, up 10% on the previous year (£297.3bn).
Savings balances increased by £4.2bn in the quarter, three times the £1.4bn increase in the third quarter of 2020.
Cash ISA balances held with building societies increased by £0.2bn in Q3 2021, compared to a decline of £3.6bn across the market as a whole.
Andrew Gall, chief economist at the BSA, said: “The strong level of mortgage lending activity in the third quarter by building societies, and across the wider market, suggests that the tapering of the stamp duty holiday has not been a major barrier to property purchase.
“It is likely that households will continue to re-evaluate their housing needs in the post-pandemic world, which will to continue to support demand into the new year.
“The Bank of England is sounding like it is ready to increase the Bank Rate from its historically low level of 0.1% over the coming months.
“Whilst this may see some mortgage rates rise, the vast majority of households are on fixed term products and so won’t see any immediate change to their monthly repayments.
“Savings balances have also grown at building societies in the period and it’s particularly pleasing to see an inflow to cash ISAs, despite a £3.6bn outflow across the market.”