BSA members have reported that loans to first-time buyers went up 50% in the first five months of this year compared with the same period in 2012, with more than 32,000 buyers getting their first mortgage.
Among first-time buyers with a deposit of 10% or less the difference between this year and last is even more marked with more than two and a half times the number of loans made, rising from 3400 to 8900.
More generally, data published by the Bank of England on lending to all types of borrower shows that building societies and other mutual lenders lent £3.6billion in mortgages in May, compared to £2.8billion in May 2012, a 28% increase. This means that mutual lenders accounted for 24% of all mortgage lending across the UK in May.
In the five months to May this year mutuals have lent £14.5billion, a 24% share, up from £11.4billion (20% share) in the same period last year.
On a net basis, after repayments on existing mortgages are taken into account, mutuals lent £1.2billion in May, up from £0.9billion in May last year. In the five months January to May, net lending by mutuals was £4.0billion, more than double the amount lent in the same period in 2012. In contrast, net lending across the rest of the market contracted by £3.4billion in the first five months of this year. The mutual sector remains the only part of the mortgage market in the UK where mortgage balances are rising.
Savings balances held with building societies and other mutuals rose by £1.1billion in May, compared to an increase of just £0.2billion in May last year. In the five months January to May, the amount of savings held has increased by £3.7billion. This is in sharp contrast to the same period last year when deposits fell by £1.1billion.
Paul Broadhead, Head of Mortgage Policy at the BSA said: “Building societies and other mutual lenders continue to play a dominant role in supporting members of the UK public looking to buy a new home. While total net mortgage lending across all other lenders dropped by £3.4billion in the five months to May, net mortgage lending by the mutual sector increased by £4billion.
“Supporting first-time buyers is very much part of the sector’s ethos and in the first five months this year the number of loans to this group jumped by 50% compared to last year. Importantly, as deposits remain a clear barrier to home ownership, building societies and other mutuals have made over two and a half times as many loans to first time buyers with a deposit of 10% or less.
“On the savings side, the strong inflows suggest that mutuals are offering attractive products despite the challenges for providers and savers alike in relation to generally low interest rates across the market. For consumers the ongoing tough economic conditions faced by many households remain difficult.”
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