The Analysis Comment
Building-society performance shows continued growth
Lending and savings figures show increases despite concerns over the political climate
Robin Fieth Chief executive, the Building Societies Association
Lending and savings figures published last month show that building societies lent £68.9bn in mortgage finance in 2018, up 7% on 2017. Over the same period, savings balances
increased by £14.3bn, well ahead of the £8.5bn increase for the previous year.
Building society mortgage lending l Gross lending totalled £68.9bn, up 7% on the 2017 figure of £64.1bn. l Net lending totalled £17.9bn, up 12% on the 2017 figure of £16.0bn – a total 39% of market growth. l 476,803 new mortgages were approved, up 8% on 2017. This represents 31% of all mortgages approved last year. l Around one in three mortgages were to a first-time buyer. l 23% of all outstanding mortgage balances are held by building societies, equating to £322.3bn, which is up from £298.7bn at the end of 2017.
Performance Building societies performed strongly in the final quarter of 2018, adding to a robust performance for the year as a whole, which was delivered despite challenging market conditions. The housing market was and remains
subdued, with little growth except in re-mortgages. Here, homeowners have been locking into deals while interest rates stay low, to provide some financial stability in uncertain times. Mortgage-product innovation remains a
strength for the sector, together with the more personalised approach to mortgage underwriting. The strong finish in the fourth quarter
Building society savings balances l Savings balances rose by £14.3bn, well up on the £8.5bn increase in 2017. l Building societies hold savings balances of £281.7bn, 5% up on balances at the end of 2017 (£268.8bn). l Cash ISA balances grew by £9.9bn. Banks saw cash ISA balances decrease by £3.0bn. Building societies hold 37% of all cash ISA balances.
March 2019
The housing market was and remains subdued, with little growth except in re-mortgages. Here homeowners have been locking into deals while interest rates stay low, to provide some financial stability in uncertain times
of 2018 bodes well for lending early in 2019, subject to the outcome of Brexit and consumer sentiment in the run-up to 29 March. For much of 2018, wage increases were
eroded by inflation, making it harder for households to save. Savings growth across the market was relatively flat but building societies grew their share of the increase in balances from 19% in 2017 to 31% in 2018. Towards the end of the year, pay growth picked up, inflation fell, and UK
employment reached a record high. If they continue, these conditions should make it easier for households to save in the coming year. CCR
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