Building Society lending up despite economic uncertainty

13th February 2017

Building societies provided almost one in three mortgages approved in the final quarter of 2016.  Collectively they approved 109,543 new mortgage loans, up 7% on the same period in 2015.  Consumers saved less in Q4 than they did the

Lending in 2016 as a whole was higher than in 2015 with mortgage approvals up by 13%.  Consumers had a total of 448,157 mortgages approved by the UK’s 44 building societies, to the value of £65.4 billion. Savings balances increased by £18.5 billion, up 79% on the amount in 2015.

Commenting, Paul Broadhead, Head of Mortgage Policy at the BSA said “Despite the uncertainties facing the UK economy in the wake of the vote to leave the European Union, consumer confidence remained remarkably strong in the final three months of 2016.  This was reflected in the demand for mortgages which was up on 2015. Momentum did, however slow in the second half of the year.  This was not simply due to ‘Referendum’ caution, the Stamp Duty change in April also had a noticeable effect. “So far this year employment levels have remained stable and low interest rates are clearly an advantage for home buyers, but the uncertain economic outlook for 2017 may mean home buyers exercise more caution.”

“Even with many savings rates across the sector at a multiple of the Bank Base Rate, absolute returns for savers remained low in 2016.  However, consumers still saved hard and balances in building society accounts rose.  Our research* shows that the main reasons people increased their savings was to build up a savings buffer or save for a deposit on a home. In 2017 households will have to contend with higher consumer prices and relatively low growth in wages. This could force some people to use their savings to support current levels of spending putting pressure on their ability to save and reducing retail savings inflows.”