BSA: Lending by building societies in first quarter doubles

BSA: Lending by building societies in first quarter doubles

BSA: Lending by building societies in first quarter doubles

. Building society gross advances amounted to £5,469m in March 2007, compared to £4,199m in March 2006.

. Net advances were £1,848m in March 2007, versus £815m in March 2006.

. Approvals were £5,741m in March 2007 up from £5,643m in March 2006.

. Building societies had net receipts of £741m in March 2007, compared to net receipts of £384m in March 2006.

. Building society net receipts to cash ISAs were £683m in March 2007, compared to £603m in March 2006.

Commenting on the mortgage market, Adrian Coles, Director-General said:

“In the first quarter of 2007 building societies recorded net lending of £4,381m, more than double the £2,163m in the same period in 2006. This is largely a reflection of strong approvals (loans agreed but not yet made) seen in recent months.”

“Yet again building societies saw record lending in March, with gross lending the highest ever recorded for that month. Approvals were also the highest for any March since 1988.”

“However, lending may be beginning to cool. We usually see lending picking up in March, but when the seasonal variation is removed from the figures, the £4,830m of loans approved in March is more than 12% below the average for the prior three months. Therefore, we may see slower growth in mortgage lending in coming months. A further rise in rates in May would probably take further heat out of the market later in the year.”

Commenting on the savings side, Mr Coles said:

“Savings into building societies in March were up 93% on the same month in 2006, and were the highest March figure for six years. This may be due to higher rates of interest, or savers seeking the safety of cash savings accounts following the decline in the stock markets in early March. A further rate rise next month would make saving even more attractive, but pressures on take-home pay may limit the amount that households are able to put away.”

Notes to Editor

1. The Building Societies Association (BSA) represents all 60 building societies in the United Kingdom. Building societies have total assets in excess of £310 billion and hold residential mortgages of almost £210 billion, approximately 18% of the total outstanding in the UK. Societies hold almost £200 billion of retail deposits, accounting for about 19% of all such deposits in the UK. Building societies also account for over 37% of all cash ISA balances. Building societies employ almost 50,000 full and part-time staff and operate through around 2,150 branches.