Mortgage approvals by mutuals jump 29% in March

Mutuals approved £2.1 billion worth of mortgages in March 2011, which is up 29% on the £1.7 billion approved in March 2010 and compares to £1.7 billion in February 2011.

Gross lending by mutuals totaled £1.7 billion in March 2011. This is up 8% compared to £1.6 billion in March last year, and compares to £1.5 billion of lending in February this year.

Commenting on the mortgage figures, Adrian Coles, Director-General of the Building Societies Association, said: "There was a significant rise in the value of mortgages approved by mutuals in March. Indeed, across the first quarter of 2011 mortgage approvals by mutuals were 28% greater than in the same period a year earlier.

"However, these are increases from very low levels, and compared to previous times activity in the mortgage market remains subdued. This is largely because economic uncertainty continues to affect confidence in the housing market."

Savings balances held at mutuals increased by £273 million in March, compared to an increase of £534 million in March 2010. After interest credited is excluded, mutuals had a net withdrawal of £604 million in March this year.

Mr. Coles said: "Savings balances at mutuals grew in March, although once interest credit is excluded, there was a net withdrawal from savings accounts. Although interest rates may rise later in the year which may encourage more saving, household finances continue to face significant pressures. Households' ability to save is under strain from above target consumer price inflation, which is higher than the rate of wage growth, and the recently implemented austerity measures."