Press release

Mortgage market subdued & competitive but building societies are positive

Lending and savings figures from the building society sector for the three months to June¹ show that the sector accounted for over a third (37%) of the growth in the mortgage market, and took more than a quarter (27%) of cash savings deposits. 

In the first six months of this year, 755,000 mortgages were approved across the whole UK market of which 234,064 (31%) were from a building society.  Even though the overall number of mortgage approvals is similar to 2017, the balance between house purchase and re-mortgages has changed.  Mortgages approved for house purchase are down 4% and re-mortgages are up by 7%.  

Household savings balances across the whole market grew by £22.5 billion in the first six months of the year, 3% more than the same period in 2017.  At the end of June, building societies held savings balances of £276.0 billion up by £7.4 billion since the end of 2017.

Commenting Robin Fieth, Chief Executive of the BSA said:

“All indications suggest that the subdued picture in the mortgage market will persist for some time. Surveyors are consistently reporting fewer newly agreed sales and the average time for a home to sell is rising. It is unsurprising that re-mortgage activity is on the increase.  With 9 in 10² new mortgages and two-thirds² of outstanding mortgage balances on fixed rate, the trend is likely to continue.    

“The growth in savings balances is recovering. This may in part be due to savers becoming more risk averse with the flight to cash a safety mechanism.  This view is supported by the reduction in net sales of alternative asset classes, which at £11 billion³ in the first 6 months are down by 44% on the first half of 2017. Wages have also risen in line with CPI inflation, giving households a bit more leeway to save.

“Continued uncertainty around the UK’s withdrawal from Europe and the prospect of global trade wars is almost certainly contributing to the behaviour of borrowers and savers.  Another factor now in play is the modest rise in the base rate.  The response in relation to trackers and fixed rates for existing savers and borrowers is straightforward, the same is not true for variable rates and the pricing of new products.  Multiple factors have to be taken into consideration when these rates are set, of which the base rate is just one.”

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Contacts

Amy Harland, amy.harland@bsa.org.uk Tel: 020 7520 5927

Notes to editors

¹Q2 Figures for building societies follow

Mortgage lending

  • Building societies hold outstanding mortgage balances of £312.6bn, a 23% market share, and up 6% on the £293.7bn at the end of Q2 2017.
  • Gross lending was £16.8bn, a 26% market share, and up 4% on the £16.1bn in Q2 2017.
  • Net lending was £4.3bn, a 37% market share, and down 7% on the £4.6bn in Q2 2017.
  • Building societies approved 120,681 new mortgage loans, a 30% market share, and up 7% on the 112,384 loans in Q2 2017.

Savings balances

  • Societies hold savings balances of £276.0bn, an 18% market share, and up 4% on the £265.5bn at the end of Q2 2017.
  • Savings balances increased by £4.1bn, a 27% market share, and up 24% on the £3.3bn increase in Q2 2017.
  • Cash ISA balances grew by £5.4bn. Banks cash ISA balances remained unchanged. Building societies have a share of 37% of all cash ISAs deposits.

Download building society mortgage lending figures here

Download building society savings figures here.

² Source FCA MLAR

³ Source Investment Association monthly statistics