Building Societies see rise in mortgage approvals

01 November 2009

The value of mortgages approved by building societies increased to £1,565 million in September 2009 compared to £1,264 million in August. Gross lending by building societies was £1,605 million in September compared to £1,493 million in August.

However, activity remains considerably more subdued than a year earlier.

Commenting on the lending figures, Adrian Coles, BSA Director-General, said:

“Lending activity has recovered in recent months, when compared to the start of the year, as buyers and sellers tentatively return to the market. However, lending is still at levels much below that of previous years, and the slight recovery remains fragile.

“A further constraint on lending remains the conditions in mortgage funding markets, although wholesale markets have shown signs of opening up slightly.”

In the savings market, balances held in savings accounts at building societies reduced by £511 million. Excluding any interest added to accounts, building societies experienced a net withdrawal of £895 million in the month.

Commenting on the savings figures Mr Coles said:

“The amount of savings held with building societies decreased in September. Savers face very challenging conditions, with the Bank Rate set to remain at its current low level and the labour market weakening further.

“While these factors are affecting all deposit takers, institutions that have explicit Government backing should ensure that they do not exploit this unfair advantage and distort competition.”

It is difficult to make direct comparisons with previous years' data as Britannia merged with Co-operative Financial Services in August 2009, after which Britannia is no longer classified as a building society.

- Building society gross lending was £1,605 million in September 2009 compared to £3,004 million in September 2008.

- Net lending by building societies was -£625 million in September 2009 compared to £321 million in September 2008.

- Mortgages approved by building societies in September 2009 amounted to £1,565 million compared to £2,624 million in September 2008.

- Savings balances held by building societies decreased by £511 million in September 2009 compared to an increase of £500 million in September 2008.

- Excluding any interest added to building society savings accounts in the period, £895 million was withdrawn from building society savings accounts in September 2009, compared to a withdrawal of £170 million in September 2008.

- Building societies had a net withdrawal of £309 million from Cash ISAs in September 2009, compared to a withdrawal of £367 million in September 2008.