Mutual mortgage lending flat in August

Nia Williams

September 29, 2010

Net lending by mutuals in August was -£284 million compared to -£379 million in July and mortgage approvals in August were £1.8 billion, down from £1.9 billion the month before.

Paul Broadhead, head of mortgage policy at the BSA, said: “Both gross lending and mortgage approvals by mutuals in August broadly matched the year-high figures recorded in July, which is encouraging, particularly when assessed against wider industry trends.

“However, the market continues to show falling levels of demand and a flattening out of house price growth. With continued economic uncertainty, lending activity could fall back if buyer interest continues to show signs of weakness.”

Savings balances held at mutuals decreased by £699 million in August, following a decrease of £1.0 billion in July. Excluding interest credited to accounts £1.0 billion was withdrawn in August, compared to £1.3 billion in July.

Brian Morris, head of savings policy at the BSA, said it was likely that continuing economic pressures on households would explain the withdrawal from savings accounts seen in August.

He said: “Consumer prices are outpacing growth in average earnings and unemployment remains elevated. Also, the low bank rate is making it difficult to attract people who can afford to save when potentially higher, if more risky, returns are possible in the equity markets.”

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