Gross lending up 19% at mutuals in April

Gross mortgage lending by mutuals increased by 19% in April to £1.7bn, compared to £1.4bn last year, Building Societies Association figures show.

Approvals were also up on the year, as mutuals approved £1.7bn of mortgages in April, compared to £1.5bn in April 2010, a 14% increase.

Adrian Coles, director-general of the BSA, says it is a promising trend.

He says: “Lending activity by mutuals continues to improve with both gross lending and approvals in the first four months of the year up over 20% compared to the same period in 2010.

“This is a promising trend, but the number of transactions and the level of mortgage lending are likely to remain low until economic growth recovers and consumer confidence returns.”

Savings balances held with mutuals also increased by £1.5bn in April 2011, compared to an increase of £0.9bn in April 2010.

After interest credited is excluded, mutuals had a net receipt of £1bn in April this year.

Coles says: “Mutuals had a significant inflow of funds into savings accounts during April which was helped by particularly strong deposits into ISA accounts compared to April last year.

“However, it will be difficult for deposit takers to maintain a positive inflow of funds this year given the squeeze on household finances. The added competition from state-backed NS&I could also make attracting funds more challenging.”