Building society advances hit £4.636m in May

The Building Societies Association has reported that building society gross advances hit £4,636m in May 2007,up from £4,613m in May 2006.

Net advances were £1,261m in May 2007, versus £1,527m in May 2006.

Approvals were £4,739m in May 2007, down from £5,454m in May
2006.

Adrian Coles, director general of the BSA, says: “It has been a slow start to the summer.

“Building society mortgage lending is down year on year, as the interest rate rises since August last year have started to take the heat out of the mortgage market.

“New lending (net advances) fell year on year by 17%, having been buoyant since summer last year.

“Similarly approvals, loans agreed but not yet made, a good indicator of what will happen in the market over the next few months, were down year on year by 13%, having fallen year on year in April by 8%.

“There is likely to be more subdued lending as the year progresses
and the rate rises continue to feed through.”

Cole says another rate rise would add to the slowdown later in the year and into 2008.

However, he believes a reasonably strong economic outlook, especially continuing robust employment, should provide support to lending and property prices.