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Building societies lose market share

Building societies saw their share of the UK mortgage market fall in 2014 despite an increase in gross lending, figures show.

According to the Building Societies Association, mutuals advanced a total of £52.6bn last year, equating to 26 per cent of the £204.4bn advanced by all mortgage lenders in 2014, as reported by the Bank of England.

Despite the increase in gross lending, mutuals’ share of the mortgage market fell from 29 per cent in 2013, when building societies advanced a total of £50.4bn from a total of £177bn.

However, BSA head of mortgage policy Paul Broadhead says the figure remains above mutuals’ “natural market share” of around 19 per cent.

Year-on-year figures show gross lending by mutuals increased 4.4 per cent from £50.4bn in 2013.

A total of 373,140 mortgages were approved by building societies last year, down 7.6 per cent from the previous year’s 403,636.

On a quarterly basis, gross lending by building societies fell 2.8 per cent from £14.2bn in Q3 2014 to £13.8bn in Q4. Approvals fell from 13,695 to 12,937 in the same period.

Broadhead says: “Competition will be stiff in 2015, especially now that an increase in base rate this year looks to be out, even to the point of the Bank of England stating that a drop in this rate, while unlikely, is a tool that will be used if necessary.

“Mortgage demand came off the boil at the end of last year. Now, uncertainty around the general election and matters further afield, like the fate of Greece and the eurozone, may have a dampening effect, although consumers should take heart from the fact that mortgage availability is good.”

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