Mutuals Build Market Share As Banks Struggle
Mutuals share of the mortgage market bounced up sharply in the first six months of this year
, the Building Societies Association has reported.
Mortgage approvals by mutuals were up 45% compared with the first half of last year, and in June were up by 35% on June 2011.
Gross mortgage lending by building societies and other mutuals was 14.1bn, up 38% compared to 10.2bn in the same period in 2011.
Lending rose 28% to 2.7bn in June 2012, up from 2.1bn in June 2011. Net lending by mutuals was 2.7bn in the first six months of 2012 and 0.7bn in June 2012.
Retail savings balances at mutuals increased by 639m in June compared to a net withdrawal of 94m in the same month last year. After interest credited is removed there were net receipts of 378mn.
Paul Broadhead, head of mortgage policy at the BSA, said: Lending by mutuals has grown in each month of 2012 on a year on year basis, and the June figures for mortgage approvals are above the previous six months average.
This means that lending by mutuals looks likely to continue to be strong in coming months. Growth in lending by banks over the past six months has been relatively weak while the economy remains in recession.
In contrast, mutuals have demonstrated their commitment to lend, and are currently offering some of the best rates available in the market.Broadhead went on: It is encouraging that savings balances at mutuals increased in June, and this was a significant improvement compared to the same month last year.
However, the low interest rate environment continues to make it challenging for households to save, especially when wage growth has been subdued for quite some time.
At its July meeting, the Monetary Policy Committee considered a reduction in the Bank Rate. Such a cut would be a further blow to hard-hit savers and, with rates already so close to zero, we judge it would anyway have little impact on demand in the economy.
Brian Murphy, head of lending at Mortgage Advice Bureau, said: Weve been undertaking significant levels of business with the mutual market this year as they remain committed to lending and have some of the most competitive rates in the market.
MABs National Mortgage Index found that application levels have fluctuated in the first half of the year, but while they are still 6.9% higher than at the same point in 2011, gross mortgage lending by mutuals is 38% higher, which is testament to their competitive pricing and innovative products.
Last week, the Council of Mortgage Lenders released lending and market share figures for last year, showing Lloyds in first place with a 19.9% market share, down from 22.2% the year before.
By contrast, Nationwides 12.1% market share had improved from 9% the year before, while Yorkshire Building Society rose from 2.1% to 2.9%, and Coventry Building Societys market share went from 2.6% to 2.8%.
Skiptons market share went from 0.3% to 1.1%, and Leeds from 0.7% to 0.9%.
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