Date Published 05 July 2012
Gross mortgage lending by building societies and other mutual lenders rose 54% to £2.8billion in May 2012 compared to £1.8billion May 2011.
In the first five months of 2012 lending rose 40% compared to the same period in 2011. In comparison, during the same period bank gross lending rose 8% (May 2012 vs May 2011) and year to date was up 4%.
Net lending by mutuals was positive for an eighth consecutive month, reaching £835million in May.
Mortgage approvals by mutuals were up by 67% in May compared to the same month last year, and were 32% higher than the average over the previous six months. Approvals were up 48% in the first five months of the year compared to the same period in 2011.
Retail savings balances at mutuals increased by £240million in May, compared to a net withdrawal of £419million in the same month last year. After interest credited is removed there was a net withdrawal of £1million in May.
Adrian Coles, Director-General of the Building Societies Association, said: "Lending activity by mutuals in May was once again strong. Other data collected by the BSA shows that nearly a quarter (24%) of new lending this year by mutuals was to first-time buyers.
"The mutual sector is giving a strong signal that it is open for business to all types of borrower whether buying a property for the first time or remortgaging. Approvals by mutuals were up significantly in May both compared to last year and the previous six months which demonstrates the mutual sector`s commitment to lend in the coming months.
"Savings balances at mutuals increased in May, but after interest credited is removed balances were virtually flat. The current economic climate means it remains difficult for households to save, and the low interest rate environment makes it difficult to attract savings. The Monetary Policy Committee may well expand its programme of quantitative easing when it meets later this week. However, one of the policy options it also considered last month was reducing the Official Bank Rate below 0.5%. This would further reduce the incentive for households to save, so could make it harder for all lenders to attract the funds to lend."