Building societies trade strongly in tougher market conditions

Posted On: 
13th February 2018

Released today, lending and savings figures from the BSA for 2017 show that building societies approved 29% of all new mortgages in 2017, and savers deposited £8.5 billion in building society accounts.

Building society mortgage lending 2017

  • Approved 442,996 new mortgage loans, down 1% on the 448,222 mortgage loans approved in 2016.
  • Gross lending was £64.1 billion, down 3% on the £66.4 billion lent in 2016.
  • Hold outstanding mortgage balances of £298.7 billion, a 22% market share.

Building society savings balances 2017

  • Savings balances rose by £8.5 billion, down 54% on the £18.6 billion increase in 2016.
  • Savings balances across the whole market increased by £45.9 billion, giving building societies a 19% share of new savings deposits.
  • Building societies hold savings balances of £268.8 billion, 18% of the total market.
  • Commenting Robin Fieth, Chief Executive at the BSA said: “Consumer confidence fell during 2017 and is now subdued, this is unlikely to change until there is more clarity around the UK’s future relationship with the EU. This uncertainty may put some homebuyers off buying in the near term. However, the labour market is robust and unemployment remains low as do interest rates, so the wider economic environment will support the mortgage market to some extent.

“In addition to highly competitive mainstream mortgage products, the sector’s niche lending is what supports a diverse mortgage market. Building societies are the obvious choice for the increasing number of people who require a mortgage that will run into retirement, who want to build their own home or have other more complex borrowing needs.

“The UK savings market had a challenging year with savings balances rising by around half 2016 levels. The fall in savings growth in 2017 corresponds with a significant flow of money into other retail investment products. This suggests that savers have been chasing higher returns in riskier markets. Households have also been dealing with consumer prices rising faster than wages, making it more difficult to save. In last year’s tougher conditions building societies traded strongly.

“Looking ahead, inflation now appears to have peaked, and wages should pick up in the coming year supporting savings. If confidence in equity markets begins to fall after the recent market correction, a larger than expected amount could flow back into cash savings.”