Mutuals continue to grow lending to homebuyers

Robyn Hall

November 29, 2012

Mutuals took a 24% market share of gross lending in October, up from 19% in October 2011. Gross lending in the first ten months of the year was £25.6 billion, up from £19.1 billion in the same period last year.

Net mortgage lending (gross lending minus repayments) by mutuals was £0.7 billion in October and £5.6 billion in the first ten months of the year which accounts for 86% of total net lending in the UK over this period.

Mutuals approved 25,000 loans in October, which is up 24% compared to the 20,100 in October last year.

Retail savings balances at mutuals fell by £0.1 billion in October 2012, compared to an increase of £0.4 billion in the same month last year. After interest credited is removed, mutuals had a net withdrawal of £0.4 billion from savings account in October compared to an increase of £0.2 billion in the same month last year.

Adrian Coles, director-general of the Building Societies Association, said: “The lending figures seen today are further evidence that building societies and other mutuals are lending more to those looking to buy a home. Mutuals have accounted for 86% of all net lending in the UK in the year to October, which significantly outperforms other financial institutions. Around one in three loans made by mutuals are to first-time buyers.

“Mutuals are also offering more competitively priced products. The average mortgage rate offered by mutuals in October was 4.18% compared to 4.39% across the market[5]. Rates have also come down a little further in November which is potentially early evidence of the impact of the Bank of England’s Funding for Lending Scheme.

“Savings balances at mutuals fell marginally in October. Households are still facing headwinds such as above-target consumer price inflation which increased unexpectedly to 2.7% in October.

“According to the Bank of England inflation is now unlikely to fall back towards its 2.0% target until the end of 2013. Conditions in the labour market are however improving, which should help alleviate some pressure on household budgets.”

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