Despite challenging economic conditions, building society mortgages and savings balances have increased between January and September 2023. In the same period, balances have fallen across the rest of the market. 

Building societies support homeowners

There has been a slowdown in mortgage market activity this year as higher interest rates have put a strain on affordability – the latest BSA Property Tracker shows affordability of monthly mortgage payments is the biggest barrier to homeownership¹.  So whilst lending volumes have reduced compared to the same period last year, building societies accounted for over a quarter of all new mortgage lending in the UK, increasing their balances by £6.1 billion. Meanwhile mortgage balances at other lenders reduced by £4.5 billion, as borrowers repaid more than these mortgage providers lent out in the period. 

The number of borrowers struggling to maintain their mortgage payments has started to increase during the period, but still remains low. However, building societies’ lower-risk approach to lending decisions means they have proportionately fewer loans in arrears. 

Building societies support first-time buyers

Building societies have helped those taking their first steps onto the property ladder, providing over 70,300 first-time buyers mortgages. This accounted for nearly two-fifths of all building society lending.

Building societies support savers

Although many households have been using existing savings to cope with the increased cost of living², building societies have continued to offer competitive rates and attracted £18.9 billion in cash savings during the first nine months of the year. Savings balances at banks and other deposit takers fell by £6.7 billion. 

With the considerable rise in the Bank Rate, shopping around for a savings account can now make a sizeable, financial difference. Based on the latest analysis, building society savers received £1.5 billion more in interest than they would have got at the big banks. This is likely to have contributed to the growth in savings balances at building societies.

Building societies support customers

In the latest YouGov customer service survey, 95% of building society customers agreed that their provider offered good customer service. This is the highest score since the survey began in July 2016, and higher than the 85% of bank customers who agreed. 

In fact, building societies outscored banks on all six customer service metrics including 86% of building society customers agreeing that their provider offered competitive rates, considerably higher than the 72% of bank customers who agreed with this statement. 

Building societies support high streets

The building society sector is also committed to keeping a presence on the high street, and to supporting their local community. Building societies now account for 38% of branches in the UK, up from 17% in 2014. It is not surprising therefore that 78% of building society customers agreed that their provider is an important part of the community in which they operate, compared to just 53% of bank customers. 

Building societies key statistics - January to September 2023

• £44.8 billion gross mortgage lending - 26% market share of all lending 
• 273,000 mortgage approvals - 35% market share of all approvals
• 70,333 first-time buyers mortgages - 38% of total building society lending.
• £6.1 billion growth in mortgage balances (net lending) - balances at other lenders fell by £4.5 billion
• £18.9 billion growth in savings balances - balances at other providers fell by £6.7 billion
• 95% of customers agreed that their building society offered good customer service - compared to 85% of bank customers
• 86% of customers agreed that their building society offered competitive rates - compared to 72% of bank customer
• Building societies now account for 38% of bank and building society branches, up from 17% ten years ago

¹ In the September Property Tracker survey almost three-quarters (71%) of people cited affording the monthly mortgage payment as one of the top three barriers to buying property. 
² A survey run by Opinium for UK Savings Week found that 31% of savers said that they were relying on their savings to get them through the cost-of-living crisis.

Notes on the data

• Building society sector data is based on returns made to the BSA by building societies, and comparisons made with the rest of the market are calculated using the Bank of England’s total market data. Data tables on BSA website.
• Branch data is compiled by the BSA from its member building societies, bank websites, open data, Link data on branch closures and other data sources, collated Oct-Nov 2023.
• Mortgage arrears figures exclude loans in arrears of less than 2.5% of the outstanding balance. Mortgage arrears exclude securitised loans. Building society arrears data is calculated from a sample of building societies and so does not fully reflect the whole building society sector.
• Arrears at building societies were 0.20% at the end of Q2 2023, compared to 0.57% across the total market.
• All customer service survey figures, unless otherwise stated, are from YouGov Plc.  The total sample size was 2083 adults. Fieldwork was undertaken between 1st - 2nd November 2023.  The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+). Excludes respondents who said ‘don’t know.’ Calculations undertaken by BSA.

Ends

Press contacts:
Tanya Jackson, tanya.jackson@bsa.org.uk Tel: 07881 501098
Katie Wise, katie.wise@bsa.org.uk Tel: 020 7520 5904
 

Notes to Editors:

1.    The BSA represents all 42 building societies, as well as 7 of the larger credit unions. Building societies serve around 26 million consumers across the UK and have total assets of over £500 billion. Together with their subsidiaries, they have helped over 3.6 million families and individuals to buy a home with mortgages totalling over £375 billion, representing 23% of total mortgage balances outstanding in the UK. They are also helping over 23 million people build their financial resilience, holding over £371 billion of retail savings, accounting for 19% of all cash savings in the UK.  Within this, societies account for 41% of all cash ISA balances.
2.    With all of their headquarters outside London, building societies employ around 51,500 full and part-time staff.  In addition to digital services, they operate through approximately 1,300 branches, holding a rising share of financial services branches in local communities.