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Savings pick up as households seek to increase precautionary buffers. Lending remains robust

Building Societies Association

3 min read Partner content

Released today, figures from the BSA show that mortgage lending by building societies in the third quarter of the year was up 11% compared to Q2 despite the worsening outlook for the economy, and squeeze on household incomes. The number of approvals were however down 9%. Gross lending was also up by a fifth compared to the same period last year (Q3 2021), when the Stamp Duty holiday was in operation, although the number approvals were a little lower.

Savings balances increased by double the amount in the same period last year as households increase their precautionary savings to act as a buffer in the wake of increased economic uncertainty. There are however many households who are unable to save, and will face growing financial pressures in coming months.

Building society mortgage lending Q3 2022

  • Gross lending in Q3 2022 was £20.2 billion, up 20% on Q3 2021 (£16.9bn) and up 11% on gross lending in Q2 2022 (£18.1bn).
  • During Q3 this year, building societies approved 105,060 mortgage loans, down 4% on the 109,667 approved in Q3 2021 and down 9% on the 114,947 mortgage loans approved in Q2 2022. 
  • Building societies hold outstanding mortgage balances of £366.7 billion, up 4% on Q3 2021 (£351.8bn), a steady 23% share of the total mortgage market.
  • Building societies lent to 26,084 first-time buyers in Q3 2022, 9% down on 28,667 loans in Q3 2021.

Building society savings balances Q3 2022

  • Savings balances increased by £8.4 billion in Q3 2022, double the increase in Q3 2021 (£4.2bn) and up 80% on the £4.7 billion increase in Q2 2022.
  • At the end of Q3 2022 building societies held savings balances of £342.0 billion, up 4% on the £328.2 billion held at the end of Q3 2021 and an increase of 2% on balances at the end of Q2 2022 (£335.5bn).
  • Across the market as a whole, savings balances grew by 4% in Q3 2022 compared to Q3 2021.
  • Cash ISA balances held with building societies increased by £0.1 billion in Q3 2022, compared to a decrease of £2.5 billion across the market as a whole.

Commenting Robin Fieth, Chief Executive of the BSA said:

“Gross lending by building societies remained strong throughout the third quarter, with the sector maintaining its share of the mortgage market at just under a quarter of total outstanding balances. Despite several Bank Rate rises in the first nine months of the year, the lending figures show the resilience of the housing market during this time. However, the drop in mortgage approvals suggests that the uncertain economic outlook and challenging environment for household finances will lead to more subdued lending in the coming months.

“Although arrears rates have remained low, societies are sensitive to the rising number of people facing a squeezed household budget. Anyone concerned about their ability to pay their mortgage should therefore get in touch with their lender or a debt adviser as soon as possible. They will provide a safe space for a confidential, non-judgmental chat and will do everything possible to help each borrower with options based on their own personal circumstances.

“The significant growth in savings balances during the period suggests that those who are able to are building their savings buffers, while rising interest rates and turbulence in other investment asset classes make cash savings attractive. Building societies attracted 38% of the increase in balances in the third quarter of 2022, reflecting some competitive rates on offer from societies.”

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