Mutual mortgage lending up 32%

Mortgage loans from mutual organisations such as building societies and customer-owned creditors have gone up by 32 per cent in August compared to a year ago.

According to the Building Societies Association (BSA), a gross £4 billion was lent out in mortgages, compared to around £3 billion 12 months before. As a result, the market percentage for gross lending is up three per cent for the first eight months of the year – rising to 24 per cent from 21 per cent for the same period last year.

In total, 29,631 loans were taken out in August, compared to 21,817 in the same month in 2012.

One out of every three new loans provided by a mutual lender during August was to a first time buyer, equating to 9,000 loans. Of these, 29 per cent were made to people with a deposit no larger than ten per cent.

Net lending for new mortgages – the gross lending figure reduced by redemptions and repayments – totalled £1.2 billion for the month, an upturn of 26 per cent from August 2012. For the first eight months of the year, such lending was at £8.2 billion – 87 per cent more than the same period a year ago.

BSA reports this credit through mutual businesses has offset less positive figures from other lenders – bringing the new total for lending within the UK housing market to £5.6 billion.

The findings also suggest that more money can be saved through mutuals as retail savings increased by £1.5 billion during August, in comparison to a rise of £1.2 billion 12 months prior. For the first eight months of 2013, the balances for retail savings improved by £7.1 billion. This was £1.9 billion during the same timeframe in 2012.

However, BSA states the current level of borrowing is still below the historic averages. Around 60,500 loans were approved in the last three months, but the average between April 1993 and December 2005 was 96,300 each month.

By James Francis