Released today, figures from the BSA for Q3 2020 show that building societies took a market share of 28% of new mortgage approvals in the quarter.

Building society mortgage lending Q3 2020

• Building societies hold outstanding mortgage balances of £338.0bn, a 23% market share, and up 1% on the £333.9bn at the end of Q3 2019.
• Gross lending was £14.6bn, down 9% on the £15.9 billion in Q3 2019.
• Net lending was £1.2bn, down 43% compared to the £2.1 billion in Q3 2019.
• Building societies approved 111,800 new mortgage loans (a 28% market share) and was up 5% on the 106,200 loans in Q3 2019 (26% market share).
• Building societies lent to over 20,000 first-time buyers.

Building society savings balances Q3 2020

• Building societies hold savings balances of £297.3bn, up 2% on the £291.0bn at the end of Q3 2019.
• Savings balances increased by £1.9bn (a 5% market share) and were up 40% on the £1.3bn increase in Q3 2019 (12% market share).
• Cash ISA balances fell by £1.3bn in Q3 and banks saw cash ISA balances fall by £1.9bn. Societies had 37% of all cash ISAs deposits at the end of Q3.

Commenting Paul Broadhead, head of mortgage policy at the BSA said:

“It has been a turbulent year for the mortgage market, with transactions collapsing due to the lockdown in March, but approvals for house purchase recovering to 10 year highs in the third quarter, as pent up demand was released and buyers rushed to take advantage of the stamp duty holiday.

“Building societies have been able to support homebuyers during this period, approving 28% of all new mortgage loans in the third quarter of the year.

“Although the housing and mortgage markets are buoyant at the moment, and the wider economy has recovered somewhat, we are far from out of the woods. Around 9% of the workforce (3.3 million jobs) are currently being supported by the furlough scheme, and only once this and other government support has ended will the long term impact of coronavirus be fully understood.  We are also concerned about the cliff edge effect of the abrupt end of the stamp duty holiday on 31 March and have called on the Government to taper its removal to lessen market impact. 

“The savings market has seen strong inflows since the start of the coronavirus. Although many households have seen their income, and ability to save cut, on aggregate people have been able to save more as both their essential and discretionary outgoings have been reduced. Savings in the first 9 months of 2020 are already double the amount seen over the whole of 2019. The savings market has been somewhat distorted since NS&I’s net financing target was increased to £35 billion from £6 billion. This allowed NS&I to offer market leading rates that banks and building societies simply cannot match. This resulted in NS&I taking 66% of new savings in the third quarter of the year.  Having taken in two-thirds of new savings, they abruptly slashed their rates¹. We should see in the next quarter whether and how consumers react to this move. 

“If borrowers find themselves in financial difficulty whether due to the coronavirus, or any other reason, we encourage them to contact their lender before they miss a payment to discuss the options available to help them, including the mortgage payment deferral scheme and other tailored support.”²

Contacts
Katie Wise, Katie.wise@bsa.org.uk Tel: 020 7520 5904

Tanya Jackson, Tanya.jackson@bsa.org.uk

Notes to editors

Download building society mortgage lending figures here

Download building society savings figures here.

1. Reduced NS&I rates were announced in September and take effect from 24 November 2020
2. Details of the mortgage payment deferral scheme, which has been extended to 31 July 2021 can be found here

Definitions

• Gross lending figures refer to the total value of loans advanced in a given period.
• Net lending refers to the flow of gross lending less the flow of repayments. The figure for monthly net lending will not necessarily equal the difference between the amounts outstanding this month and the previous month, because various adjustments are applied, such as adjustments for bad debt write-off to arrive at net lending.
• Approvals are the firm offers of lenders to advance credit secured on specific dwellings to their customers. This is the total agreed advance, irrespective of whether the mortgage offer has been accepted by the customer. Approvals are reported net of cancellations.