Approvals by mutuals hit £1.4bn

29 March 2010 | By Natalie Thomas

Figures from the Building Societies Association show that gross lending at mutuals grew 13% in February, going from £1.04bn in January to £1.17bn last month.

But net lending by mutuals dropped from -£819m to -£830m over the same period.

Adrian Coles, director-general of the BSA, says: “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.”

The BSA notes that the Bank of England, where the BSA’s figures are drawn from, has combined figures for building societies and mutually owned banks for January data onwards.

As a result it is not possible to make comparisons with previous periods.

The mutual sector saw balances in savings accounts increase by £807m last month, ending an 11-month run of net withdrawals.

In January savings balances fell by £647m.

Mutuals had a net withdrawal of £109m from cash ISAs in February 2010 compared to a net withdrawal of £180m in January.

Coles adds: “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.”

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