Press release

Building societies maintain share of lending in slowing mortgage market

21 November 2016

Today the Building Societies Association (BSA) releases mortgage lending and savings figures for all 44 building societies for the third quarter of 2016.  The figures show that lending by building societies continues to grow on a year on year basis, however the rate of growth has slowed, reflecting the trend across the whole mortgage market. Societies maintained a strong market share of both gross lending and approvals. New savings inflows remain very strong despite the low interest rate environment.

Mortgage lending

  • Building societies approved 110,129 new mortgage loans between July and September, up 6% on the 103,758 mortgage loans approved in Q3 2015. 
  • There were 366,125 new mortgages approvals across the whole mortgage market in Q3, meaning building societies took a market share of 30%.
  • Gross lending by building societies in Q3 was £16.4bn, 9% higher than the £15.0bn lent in the same period in 2015.
  • Total market gross lending in Q3 was £63.7bn, giving building societies a 26% market share.
  • Building societies were responsible for 45% of mortgage market growth in Q3, contributing £4.9bn of the total £10.9bn net lending across all mortgage lenders.
  • More than half (55%) of new building society mortgages for house purchase in Q3 were to first-time buyers¹

Savings

  • Savings balances held with building societies increased by £4.5bn in Q3, up 22% on the same period last year.
  • Savings balances across the market increased by £21.1bn, meaning building societies took a 21% share.
  • This leaves building societies with an outstanding savings balance of £260.2 billion, an 18% share of the £1,411.3 billion across the market.

Commenting on the figures, Andrew Gall, BSA Chief Economist, said:

“The mortgage market has slowed after the rise in Stamp Duty on second homes in April, and the uncertainty following the EU referendum in June. However, the number of mortgages approved by building societies in the third quarter was up 6% on the same period last year, whereas across the market as a whole the number of mortgages approved was down by 5%. The sector’s continued significant share of mortgage lending demonstrates the competitive rates on offer and societies’ ongoing commitment to help consumers realise their aspirations to buy a home.

“New savings deposits with building societies increased by 22% in the third quarter compared to the same period last year, despite the reduction in Bank Rate in August. Households may have increased their precautionary savings given a slightly weaker outlook for the labour market, and higher expected inflation. Some degree of uncertainty is likely to prevail over the next few years as the UK’s exit from the EU and our new relationship are negotiated. This could see continued volatility in equity markets, further boosting the appeal of cash savings.”

~ Ends ~

Notes to editors

Contacts – Hilary McVitty (hilary.mcvitty@bsa.org.uk / 020 7520 5926) and Amy Harland (amy.harland@bsa.org.uk / 020 7520 5927)

¹ Source: CML Regulated Mortgage Survey. Regulated mortgages for house purchase only.