Press release

Building societies maintain high market-share in subdued mortgage market

24 May 2017

Building societies continued to approve one in three new mortgages across the UK in the first three months of 2017, and to provide a third of loans made to first time buyers. Gross lending by the sector was down 15% compared to last year when Stamp Duty changes distorted the market, but overall the market is relatively subdued and is expected to remain so for the remainder of the year.

Mortgage lending Q1 2017

  • Building societies approved 112,287 new mortgage loans, up 2% on the 109,762 mortgage loans approved in the same period in 2016. (Q4 2016: 109,608).
  • There were 359,159 new mortgages approvals across the market, giving building societies a market share of 31%.
  • Gross lending by building societies was £15.1bn, 15% lower than the £17.7bn lent in the same period in 2016. (Q4 2016: £16.4bn).
  • Total market gross lending was £58.3bn, giving building societies a market share of 26%.
  • Building societies were responsible for 50% of the growth in the mortgage market, contributing £3.9bn net lending of the total £7.9bn across the market.
  • Building societies hold outstanding mortgage balances of £289bn, a 22% market share.

Savings balances Q1 2017

  • Savings balances held with building societies increased by £1.0bn, well below the £4.3bn increase in the same period in 2016. (Q4 2016: £2.9bn).
  • Savings balances across the market increased by £8.2bn, giving building societies a 12% market share; banks took 41% and NS&I 46%.
  • Building societies hold savings balances of £264bn, an 18% share of the £1,435bn across the market.

Commenting Robin Fieth, Chief Executive of the BSA said:

Mortgages
“Activity in the mortgage market was relatively subdued in the first quarter of the year. Homebuyers have been struggling with low levels of properties coming on the market, meaning the availability of suitable housing is limited and so fewer transactions have taken place. House prices as a multiple of earnings are also hovering around their historic peak, making affordability more difficult for first time buyers or those moving up the property ladder. These conditions are unlikely to change in the near term and so activity will remain subdued for the remainder of the year. Although house prices have reduced slightly in recent months, the record low mortgage interest rates currently on offer and the lack of housing supply relative to demand will support house prices over the year.

“Despite the challenges facing the housing market, building societies have maintained a high market share of mortgage lending. Collectively they approved one in three new mortgages between January and March, and delivered half the growth in the whole market. Buying a home is not always a straightforward process and each borrower has different needs and faces different circumstances. Building societies are able to take a more personalised approach to lending, responding to factors including changing age demographics and working patterns.”

Savings:
“In the first three months, an unusually high share of savings inflows went to NS&I. This seems due to the rates on their products not being changed in line with the fall in market rates following the base rate reduction in August. On 1 May, NS&I cut its rates and we can now expect its share of the market to fall back.

“Savers face a challenging 2017 as CPI inflation has already surpassed wage growth and is expected to reach 3.0% by the end of the year. Households may need to use their savings just to maintain their current standard of living. Therefore, we expect to see a continued slowdown in the growth of savings balances during the rest of the year.”

Notes to editors

Building society mortgage lending figures can be downloaded here
Building society savings figures can be downloaded here.