Over a million building society savings accounts opened in 2008

Over a million new building society accounts (net of closures) were opened in 2008, building societies reported today.

Adrian Coles, Director-General of the BSA, said: "The low interest rates that we currently have reduce the incentive to save, but the popularity of building society savings accounts is such that an additional 1.2 million accounts were opened over the last twelve months."

Building societies suffered a small net outflow of funds in January 2009 of £390 million, although once normal seasonal factors are taken into account there was a healthy inflow.

"The withdrawal represents less than 4% of the total net receipts received by building societies in 2008. It is not unusual for building societies to have a net withdrawal in January, as savers take money out of their accounts to pay for Christmas expenditure. Outflows have occurred in six Januaries out of the last ten. Adjusting for this normal seasonal factor there was a healthy net inflow of £722 million, once again illustrating the popularity of building society savings accounts.

Gross mortgage lending by building societies was £1,570 million in January, down on the £2,395 million seen in December.

Commenting on the figure, Mr. Coles said: "With the depressed state of the housing market, it is no surprise that mortgage lending was so low in January. Indeed, repayments of existing loans exceeded new lending. Potential buyers may not enter the market while it appears that house prices are likely to continue to fall. Lenders may also be wary about granting loans in a declining market and in the current unsettled market conditions will have concerns about the long term availability of funding."