Building societies continue to drive growth in the UK mortgage market in October

Building societies and other mutual lenders continue to be the main growth driver in the UK mortgage market with net lending of £1.4 billion in October compared to net lending by all other lenders of £0.7 billion. 

Mutual lenders continue to play an instrumental part in helping first time buyers get on to the property ladder with almost a third of all loans advanced to this group of buyers.

Commenting on performance and changes announced by Mark Carney, Governor of the Bank of England, 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. However, we believe that neither loan-to-value nor loan-to-income limits are appropriate.  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”.

October mortgage lending highlights

     Gross lending up 32% to £4.0 billion compared to £3.0 billion in October 2012.
     Total gross lending for the first ten months was £33.9 billion, 32% higher than same period in 2012.
     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.  
    Net new mortgage lending (gross lending minus repayments and redemptions) was £1.4 billion in October almost double the amount in the same month last year.
     Total net new lending by mutual lenders between January and October 2013 was £11.0 billion, almost double the amount in the same period last year.
     Total net new lending for the mortgage market as a whole January – October was £8.8 billion
Savings balances in October     

      Retail savings balances at mutuals rose by £52 million in October compared to an outflow of £105 million in the same month last year.
     In the first ten months of this year retail savings balances have risen by a total of £7.3 billion compared to a £1.6 billion increase January – October 2012. 

–  Ends-

Additional data tables are attached

     The Building Societies Association (BSA) represents mutual lenders and deposit takers in the UK including all 45 UK building societies. Mutual lenders and deposit takers have total assets of over £375 billion and, together with their subsidiaries, hold residential mortgages of £245 billion, 20% of the total outstanding in the UK. They hold more than £250 billion of retail deposits, accounting for 22% of all such deposits in the UK. Mutual deposit takers account for 31% of cash ISA balances. They employ approximately 50,000 full and part-time staff and operate through approximately 2,000 branches.
      Data in this release relates to 45 building societies and four other mutual deposit taking and lending institutions in the UK.
      Photographs of Paul Broadhead are available from the BSA press office, or from the BSA website at or Headlinemoney
     The BSA's Autumn Statement submission to the Chancellor can be read here: