Press release

Building societies drive growth in mortgage market, Q2 results show

15 August 2016
Today the Building Societies Association (BSA) releases mortgage lending and savings figures for all 44 building societies for the second quarter of 2016.  The figures show that societies maintained their strong mortgage market share, following the surge in transactions in the previous quarter to beat the change in stamp duty at the start of April. During the second quarter, activity may also have been affected by the EU referendum at the end of June.  Elsewhere, societies have seen a sizeable influx of cash savings during the second quarter of 2016.

Mortgage lending
  • Building societies approved 118,600 new mortgage loans between April and June, up from the 109,800 mortgage loans approved in the first three months of the year, and up from 98,300 in Q2 2015.
  • Across the whole market 393,400 new mortgages were approved giving building societies a market share of 30%.
  • Gross lending by building societies in Q2 was £15.9bn, 16% higher than the £13.7bn lent for the same period in 2015, but down on the high of £17.7bn in Q1 2016 as sales were brought forward ahead of the change in stamp duty.
  • Total market gross lending in Q2 was £57.1bn, with building societies’ market share stable at 28%, the same as in Q1.
  • Building societies were responsible for 82% of the growth of the mortgage market contributing £5.5bn of the total £6.7bn of net lending for Q2.
Savings
  • Savings balances held with building societies increased by £6.8bn in Q2; a 29% share of the £23.5bn increase in cash invested by retail savers across the whole market.
Commenting on the figures, Andrew Gall, BSA Chief Economist at the BSA said:

“Building societies remain popular with consumers, performing strongly in both the mortgage and savings market in the second quarter of the year. They were the main driver of growth in the mortgage market, accounting for 82% of net lending. It remains too early to tell how confidence in the housing market will be affected by the decision to leave the EU, but it remains business as usual for building societies.

“Mortgage rates are already falling following the actions taken by the Bank of England earlier this month. Even before this, building societies offered excellent value to borrowers with an average mortgage rate of 2.75% in July compared to the market average of 2.93%*.

“New savings deposits at building societies increased significantly in the second quarter of the year rising by more than twice the same period last year. Cash savings balances were up across the market as a whole perhaps relating to the equity market volatility in the first half of the year, reflecting concerns in emerging markets and the outcome of the EU referendum.

"Some investors may have moved their money into cash savings for security. During this period of uncertainty households are expected to continue to save despite low savings rates. However, if inflation picks up by more than expected, savers may be forced to reduce their savings to maintain spending.”

Overall, these figures paint a positive and encouraging picture.

#ENDS#

Notes to editors

Mortgages
Mortgage lending in the first quarter of the year (April – June 2016):
  • Net mortgage lending by building societies (gross lending minus repayments) was £5.5 billion, an 82% share of total net lending across the market of £6.7 billion.
  • This leaves building societies with outstanding mortgage balances of £277.8 billion at the end of June 2016, a 21% market share.
  • Over a third, 35%, of loans made by building societies in Q2 were to first-time buyers.
Building society mortgage lending figures can be downloaded here

Savings
Household savings in the first quarter of the year (April – June 2016):
  • Savings balances outstanding at building societies now stand at £255.5 billion, an 18% share of the total £1,389.3 billion across the market.
Building society savings figures can be downloaded here.
*Source: Moneyfacts Analyser

Press contact:
Amy Harland, Press & Publications Officer,
amy.harland@bsa.org.uk

0207 520 5927