Building societies lent £57bn last year – an 8 per cent increase on the £52.7bn lent in 2014.
This gave mutuals a 26 per cent share of the mortgage market, says the Building Societies Association.
Net lending shrank from £17.3bn to £15.2bn between 2014 and 2015. However, societies accounted for 45 per cent of all net lending in 2015.
At the end of last year, building societies held mortgages to the value of £265.2bn – 21 per cent of the UK market, says the BSA.
Retail savings balances increased by £10.4bn to £246.6bn – 18 per cent of the market – in 2015.
BSA head of mortgage policy Paul Broadhead says: “Competition in the mortgage market picked up in 2015 with the large banks demonstrating an increased appetite to lend. Despite this, building societies have continued to benefit from their ability to provide mortgages to consumers with a wide range of requirements, including first time buyers, self-builders, shared owners and those needing mortgages later in life.
“Building societies’ market share in savings has held up well despite Government-backed NS&I more than trebling its share of the market in 2015.
“Despite European and global uncertainty, consumer sentiment in the housing market remains strong and building societies will continue to have a compelling mortgage lending proposition during 2016. However, we do remain concerned about consumer affordability across all housing tenures due to the continued shortage of housing supply.
“We remain convinced that a healthy housing market offers consumers a choice of tenures, whether full or shared ownership, social housing or private rental and that public policy should support this.”