Building Societies' net lending numbers have hit negative values as lending restrictions continue to tighten.
Figures from the Building Societies Association (BSA) also show savings inflows have increased rapidly as consumers seek perceived safe havens for their cash.
Net lending in June 2008 was -£526m, down from £1.32bn in the same period of 2007. Gross lending also fell significantly, from £4.65bn in 2007 to just £2.985bn in 2008, a fall of 36%.
The negative net lending figure means building societies saw more mortgage balances repaid in June than they offered as new mortgages to customers.
Adrian Coles, director general of the BSA, comments: “It is no surprise that the lending figures for societies are so low. This reflects the depressed state of the housing market.
“Many societies have chosen to follow a conservative lending policy to ensure that they maintain the high quality of their loan books.”
Figures from the Bank of England also suggest a major drop-off in mortgage lending, with just 36,000 approvals in June, down from 41,000 in May and a new record low.
While lending has been subdued, savings inflows have reached record levels, with approximately £6.3bn of incoming savings during the first six months of 2008, compared with £3.86bn in the same period of 2007.
Coles believes consumers are increasingly choosing savings accounts due to turbulence in stock markets and says many people have trust in the building society brands to keep their cash safe.
If you would like to comment on this story, contact:
Tel: 020 7484 9805
e-mail: [email protected]
Feasibility study due
'Let’s be bold enough to demand change'
Joint life second death option added to relieve tax burden on couples gifting assets
Backed by Schroders, LGIM and the IA
New system for funds without without three-year track record