Mutual lending increases again

Sam Cordon

November 29, 2013

Gross lending was up 32% year-on-year and in the first ten months stood at £33.9bn.

Building societies and other mutual lenders gross lending market share for the first ten months of 2013 was 24%, up from 22% in January-October 2012.

Around one in three new loans from mutuals in the ten months to October were made to first-time buyers (70,400 loans) of which 29% were made to borrowers with a deposit of 10% or less.

Paul Broadhead, head of mortgage policy at the Building Societies Association, said: “Building societies and other mutual lenders remain the main driving force behind growth in the UK mortgage market.

“Building societies are not addicted to the Funding for Lending Scheme and it is unlikely that this change in isolation will have a significant impact on the availability of mortgage finance, although it could have some effect on interest rates next year.

“The Bank of England’s remarks that housing transactions remain low relative to historic levels and that underwriting standards have improved since the crisis provides helpful context to the current environment.

“It is clearly necessary for The Bank to have a range of tools in its kit to manage financial stability.”

But Broadhead stressed that the BSA does not believe that loan-to-value or loan-to-income limits are appropriate.

He said: “The deployment of such direct consumer related macro-prudential tools would be a fine judgment call with caution and pre-consultation called for.

“Savings balances at mutuals increased marginally in October, but are up significantly in the first ten months of the year compared to the same period in 2012.

“It is encouraging to see a pickup in household savings this year, and the reduction in CPI inflation to 2.2% in October should ease the pressure on consumers somewhat.

“However, the low interest rate environment continues to make it a challenging time for savers and we hope that the Chancellor will adopt the savings measures proposed by the BSA in his Autumn Statement next week”.

Sign up to our daily email