Societies poised to grab bigger slice of market with increase in lending
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Building societies could muscle in on banks’ share of the mortgage market as they start to increase lending in 2011, says the Building Societies Association.
Last week Skipton Building Society revealed it boosted its gross mortgage lending fivefold in the first six months of 2011 to £717m - up from £141m in first half of 2011.
The group’s pre-tax profits were £3.9m in the first half of 2011, down from £15.9m in the same period of 2010, mainly due to anticipated loan impairment losses of £17.2m.
Yorkshire Building Society more than doubled its gross mortgage lending between the first half of 2010 and the first half of 2011. The society has reported gross lending of £1.5bn for the first six months of this year, up from £718m for the first half of 2010.
Meanwhile, Santander UK saw a 21% fall in gross mortgage lending in the first six months of the year, compared with the first half of 2010.
Its gross lending was £9.7bn, compared with £12.4bn in the first half of 2010. It did £4.2bn of lending in Q1 2011 and £5.5bn in Q2 2011.
Its lending in the first half of this year represented a market share of 15.4%, down from 19.1% in the same period in 2010.
Paul Broadhead, head of mortgage policy at the BSA, says: “It is too early to say whether societies will be able to grab some market share from banks, but the sector is more optimistic than in previous years and we expect members to increase their mortgage lending and enter some niche areas.”
Over the past few years, societies have had to pay substantial levies to the Financial Services Compensation Scheme as part of the government’s bailout of failed financial institutions.
But Broadhead says that although there is confusion on what future levies will be, they are expected to be lower than previous years, which will free up funds to lend.
Latest figures from the British Bankers’ Association show that gross lending among high street banks totalled £7.6bn in May, down 13% on May 2010.
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