Released today, figures from the BSA for Q1 2021 clearly show a robust housing market in action with mortgage lending by building societies up 33% compared to the same period last year, in part driven by the expectation that the stamp duty holiday would finish at the end of March 2021. Mortgage lending was also up 13% on Q4 2020.

Savings balances are also up both on Q1 2020 and Q4 2020, but the increases mask the overall picture as around 21%^[1] of people have actually seen their savings fall during the Pandemic with those in lower income groups hardest hit.    

Building society mortgage lending Q1 2021

• Gross lending in Q1 2021 stood at £17.9bn up 33% on Q1 2020 (£13.5bn) and 13% above lending in Q4 2020 (£15.9bn).
• During Q1 this year, societies approved 118,843 mortgage loans, 18% above the number for Q1 2020 (100,919) but slightly down on approvals in Q4 2020 (121,761) 
• Building societies hold outstanding mortgage balances of £342.5bn, a steady 23% share of the total mortgage market.
• Building Societies lent to 26,000 first-time buyers in Q1 2021

Building society savings balances Q1 2021

• Building societies hold savings balances of £316.8bn, up 7% on the £297.3bn held at the end of Q1 2020 and an increase of 2% on end Q4 balances last year.
• Savings balances increased by £9.1bn in the quarter three times the £3.0bn increase in Q1 2020 but lower than the £11.7bn increase in balances in Q4 2020.
• Cash ISA balances held with building societies increased by £1.6bn in Q1 2021, compared to an increase of £1.0bn across the market as a whole.
   

Commentary from Robin Fieth, Chief Executive of the BSA

On Mortgages and Housing

“The housing and mortgage markets remained at full tilt throughout the first three months of the year as buyers rushed to take advantage of the stamp duty holiday that was originally scheduled to finish on 31 March.  It seems increasingly clear that for some, the prospect of sustained home working has prompted moves to homes that are better suited, often outside cities. 

“Although the full stamp duty holiday ends on 30 June, the tapered extension for properties up to £250,000 until the end of September in England and Northern Ireland will continue to support much of the market outside London and the South East.  A levelling-off in house price growth would be welcome, particularly for younger buyers who continue to struggle to raise the necessary deposit or meet the regulatory affordability criteria.  With interest rates likely to remain low for some time, a reduction in the mandated 3% stress test would be welcome^[6], although a thorough assessment of a borrower’s ability to repay remains essential.

“Although most borrowers who took advantage of a mortgage payment deferral have resumed payments, a small proportion are in longer term financial difficulty even before the government support schemes like furlough finish.  Lenders will continue to offer tailored forbearance, but it is inevitable that repossession will be the only possible alternative for some, although it remains an absolute last resort for lenders.  We have been urging the Government to do what they did in the financial crisis and reduce the waiting time for government help through the Support for Mortgage Interest Loan^[3] from 39 weeks to 13.  Repossession brings dislocation and distress – the very last thing that promotes economic recovery.  SMI also represents far better value to the taxpayer than rehousing costs and housing benefit.”

Savings          

“One in three of us have been fortunate to be able to save more during the pandemic due to reduced outgoings.  However, 21% of people, generally those earning under £30,000 have actually seen their savings drop^[1].  Even before the pandemic 22% of us had less than £100 in savings and were vulnerable to a drop in income^[2].  A staggering 11 million people are not savers at all^[4].

“There is no single solution to poor financial resilience but workplace savings schemes, where small amounts are saved each month direct from an employee’s pay can help.  A recent survey indicates that this method of saving is particularly attractive to the under 35’s^[5].  BSA members are working towards an ambition of 1 million workplace savers over the next few years, helping to build personal financial resilience for those on lower incomes.”

Ends     

Contacts

Hilary McVitty, hilary.mcvitty@bsa.org.uk Tel: 07741 984 042

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

Notes to editors

Download building society mortgage lending figures here

Download building society savings figures here
 

¹ YouGov survey on behalf of the BSA between March 8/9 2021. Total sample size 2,158 adults in GB via an online survey.

² Impacts of Covid-19 on Financial Wellbeing, Money & Pensions Service 2020

³ A briefing note on SMI is available on request

⁴ Using the Workplace to get Britain Saving: being ambitious about saving, Yorkshire Building Society 2019

⁵ IPSOS Mori research on behalf of the BSA May 2021  

⁶ The FPC is currently reviewing its mortgage market tools as some factors have changed since they were introduced in 2014, notably future interest rate expectations which have indicated a rise of less than 3%pts.

Definitions

• Gross lending figures refer to the total value of loans advanced in a given period.
• 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.