BSA: Mortgage approvals and gross lending by mutuals shows continued growth in August

Despite difficult economic conditions, mortgage lending by mutuals continued to strengthen in August with loans approved up 10% on July. Both mortgage approvals and gross lending for the year to date are up 16% compared to the same period in 2010. Gross lending is at its highest level for 11 months.

Lending:

? £2.1 billion of mortgages approved by mutuals in August, up 10% compared to July, and up 17% on August 2010.

? 16% rise in mortgage approvals for the first eight months of 2011 at £14.6 billion (£12.6 billion, January – August 2010).

? 8% rise in gross mortgage lending by mutuals in August, up to £2.1 billion from £2.0 billion in August 2010.

? 16% increase in gross lending for the first eight months of 2011 standing at £14.5 billion (£12.5 billion, January – August 2010).

Savings:

? Savings balances were up £0.4 billion in August 2011, compared to a reduction of £0.7 billion in August 2010.

? Excluding interest credited to accounts, mutuals’ net receipts were essentially flat in August 2011, compared to a net withdrawal of £1.0 billion at the same time in 2010.

Commenting, Adrian Coles, Director-General of the Building Societies Association, said:

“Lending by mutuals has held up well over the summer months, and in August gross lending reached an 11 month high. Approval figures continue to look promising as consumers take advantage of the competitive mortgage rates currently offered by mutuals. However, the outlook for the economy has deteriorated over the past month as has consumer confidence, which could well spill into the housing market, causing further weakness.

 “The amount deposited in savings accounts at mutuals over August roughly equaled the amount withdrawn, meaning there was no additional saving in the month. However, this represents a big improvement on August last year when there was a net withdrawal from mutuals of more than £1 billion. Including interest that was added to accounts, savings balances increased by £0.4 billion this August, compared to a decrease in balances of £0.7 billion in August last year.

“Labour market conditions continue to be difficult, and inflation relatively high, so the relatively strong levels of savings at mutuals may well reflect households pulling out of equity investments in the face of continuing volatility in the markets.”

~ Ends ~

Contacts

Hilary McVitty and Rachel Wylie
Tel: 020 7520 5926 / 5905
Email: hilary.mcvitty@bsa.org.uk / rachel.wylie@bsa.org.uk

Notes to editors

1. Mutual statistics August 2011 – further detailed statistical tables accompany this press release

Data is not seasonally adjusted.

? Mutuals’ gross lending amounted to £2,140 million in August 2011 compared to £1,973 million in August 2010.
? Net lending by mutuals in August 2011 was -£100 million compared -£277 million in August 2010.
? Mortgage approvals by mutuals in August 2011 were £2,075 million compared to £1,781 million in August 2010.
? Savings balances at mutuals increased by £393 million in August 2011 compared to a reduction of £699 million in August 2010.
? There was a net withdrawal of £48 million from savings accounts held with mutuals in August 2011 compared to a net withdrawal of £1,023 million in August 2010.
? Mutuals had a net withdrawal of £267 million from cash ISAs in August 2011 compared to a net withdrawal of £43 million in August 2010.

2. The Building Societies Association (BSA) represents mutual lenders and deposit takers in the UK including all 48 UK building societies. Mutual lenders and deposit takers have total assets of over £365 billion and, together with their subsidiaries, hold residential mortgages of almost £235 billion, 19% of the total outstanding in the UK. They hold more than £245 billion of retail deposits, accounting for 22% of all such deposits in the UK. Mutual deposit takers account for about 35% of cash ISA balances. They employ approximately 50,000 full and part-time staff and operate through approximately 2,000 branches.

3. Data in this release relates to all 48 building societies and five other mutual deposit taking and lending institutions.

4. Photographs of Adrian Coles are available from the BSA press office, or from the Association’s website at www.bsa.org.uk or Headlinemoney www.headlinemoney.co.uk