Building Society loans lifted in the third quarter of the year, but mortgage approvals fell in the same period, suggesting that “the uncertain economic outlook and challenging environment for household finances will lead to more subdued lending in the coming months”, says the Building Societies Association.
Lending by mutuals in the third quarter rose by 11% to £20.2bn, compared to the previous three months, “despite the worsening outlook for the economy, and squeeze on household incomes”.
But during this quarter building societies approved 105,060 mortgage loans, down by 9% on three months ago.
These firms lent to 26,084 first-time buyers in the period, 9% down on the number of loans approved a year ago.
Gross lending was also up by a fifth compared to the same period last year, when the stamp duty holiday was in operation, while mortgage approvals were 4% lower than 12 months before.
Building societies hold outstanding mortgage balances of £366.7bn, up 4% on the same period a year ago, which represents a steady 23% share of the total mortgage market.
The association’s third-quarter report points out that savings doubled to £8.4bn in the third quarter, compared to a year ago, and were up 80% on the previous three months, “as households increase their precautionary savings to act as a buffer in the wake of increased economic uncertainty”.
Building Societies Association chief executive Robin Fieth says: “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.”