Gross lending up 15% at building societies

Gross mortgage lending by building societies was £1.8 billion in December, compared to £1.6 billion in November, an increase of 15%. Gross lending for 2009 totalled £18.6 billion compared to £37.5 billion in 2008.

Commenting on the lending figures, Paul Broadhead, BSA Head of Mortgage Policy, said: "Whilst it is encouraging to see an increase in gross lending at the end of the year when activity would typically decline, we believe it is likely that this rise can be attributed to a rush from buyers keen to complete transactions before the year end in order to beat the removal of the stamp duty holiday. Despite this rise, total gross lending in 2009 was only half of that in 2008 and it is likely to remain at low levels until funding conditions improve."

In the savings market balances held in savings accounts at building societies increased by £15 million in December. Excluding interest credited to accounts, building societies had a net withdrawal of £0.4 billion in December. Total balances at building societies reduced by £1 billion in 2009 compared to an increase of £19 billion in 2008.

Commenting on the savings figures, Brian Morris, BSA Head of Savings Policy, said: "Savers continue to face difficult conditions while the Bank Rate remains at such a very low level, especially with inflation returning in the near term. December is traditionally a slow month for savings as consumers make additional purchases for the Christmas period, and the return of VAT to 17.5% at the end of the year provided a further incentive to spend."