Savings balances increase at mutuals in February

Balances held in savings accounts at mutual institutions increased by £807 million in February compared to reduction in balances of £467 million in January.

After interest credited to accounts is excluded, mutuals had a net receipt of £623 million February.

Commenting on the savings figures, Adrian Coles, BSA Director-General, said: "It is encouraging to see the mutual sector attract a net inflow of retail deposits in February, ending a run of 11 monthly net withdrawals. However, attracting funds in the retail market remains challenging, although we look forward to more normalised market conditions with the removal of the 100% deposit guarantee of Northern Rock. It's too early to tell whether the inflow that mutuals received from savers this month is a one-off or if it represents a reversal of the recent trend of outflows."

In the housing market, mutuals approved £1,389 million worth of loans in February, compared to £832 million in January, a 67% increase. Gross lending was £1,174 million in February, a 13% increase on the £1,039 million in January.

Commenting on the lending figures, Mr Coles said: "The housing market is making small steps to a recovery, but lending figures are still subdued in comparison to previous years. Approvals and gross lending did improve in February, but January was a particularly sluggish month due to the poor weather conditions, and a surge of completions in December as the stamp duty holiday was coming to an end."