Gross lending by mutuals up 20% in May

Gross lending by mutuals totalled £1.8 billion in May 2011, up 20% compared to the £1.5 billion in May 2010. Mortgage approvals by mutuals, also £1.8 billion, were up by 15% compared to the £1.6 billion approved in May last year.

Commenting on the lending figures, Adrian Coles, Director-General of the Building Societies Association, said: "Both gross lending and approvals by mutuals have been stronger in the first five months of 2011 compared to the same period last year.  Although activity in the market is still considerably weaker than pre-crunch levels, mutuals have been increasing their mortgage lending and offering competitive products that continue to feature in the best-buy tables."

Savings balances held with mutuals fell by £418 million in May 2011, compared to a reduction of £373 million in May 2010. When the interest credited to accounts is excluded, mutuals had a net withdrawal of £613 million, compared to a net withdrawal of £576 million in May last year.

Mr. Coles said: "Following a strong April inflow, savings balances at mutuals fell in May, in common with other private sector deposit-takers.  It seems likely that NS&I's index-linked products attracted much of the money deposited in this period.  The UK economy has been treading water for the past six months, and with stubbornly high growth in consumer prices and relatively low growth in wages, consumers have been finding it difficult to add to their savings. Some consumers will be relying on their existing savings to supplement their incomes during this difficult time."