Mutuals see net withdrawal of £1.2bn
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Mutuals saw a net withdrawal of deposits of £1.2bn in October, the latest figures from the Building Societies Association reveals.
Gross lending held steady at £1.666bn in October, up from £1.605bn in September.
There was also a slight increase in net lending, as it climbed from -£595m in September to -£521m. Net lending in the mutual sector sunk to its lowest in February this year at -£949m.
But while the mutual sector attracted funds of £14.3bn over the period, this was against withdrawals of £15.5bn, giving a net withdrawal of £1.2bn. Net withdrawals sunk to a low of -£2.2bn in June this year.
Adrian Coles, director-general at the BSA, says: “There is little incentive for people to increase savings whilst the Bank rate remains at its current low level, and many may opt to repay debt instead. This is reflected in a reduction in savings balances at building societies this month. Building societies and other deposit takers are also facing heightened competition from institutions with a government guarantee, which is creating further distortions in the savings market.”
He adds: “Modest improvements in the housing market have occurred in recent months, especially when compared to the start of the year, however lending still remains subdued compared to previous years. Funding conditions remain difficult and the supply of properties to the market is low, frustrating any increase in demand for house purchase. Lending activity is likely to remain depressed until funding and supply conditions improve.”
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