Mortgage lending by building societies continued to be low in December 2008, with gross lending down 35% over the past twelve months, according to the Building Societies Association (BSA).
Mutuals also saw major withdrawals from cash ISAs at the end of last year as unattractive interest put off savers.
Gross lending hit £2,395m last month, down 7.7% compared with November 2008 and far less than the £3,669m recorded in the previous year.
Net lending fell 69% over twelve months and fell 22% compared with November.
"Activity in the housing market remains very depressed, and as a result the amount of mortgage lending in December was low," explains BSA director general Adrian Coles. "House prices are widely expected to fall further and unemployment is rising, so potential buyers remain cautious and are staying out of the market as they wait for it to stabilise."
Despite a cut in interest rates to just 2% last month, building societies saw a net increase in receipts, rising from £636m to £897m between November and December.
However, Cash ISAs fared badly, with net withdrawals of £212m, compared with net receipts of £46m a year ago.
Coles says he is hopeful building societies will continue to attract savers due to problems in the banking sector and relative stability of mutual organisations.
Contact: John Bakie, Tel: 020 7484 9805, e-mail: [email protected]IFAonline
Lloyds 'not entitled' to give notice
Alternatives to alternatives?
Our weekly heads-up for advisers
Patience must be a watchword
'Misleading, unclear, unfair' promotions