Gross mortgage lending by mutuals rocketed 40% in Q1 2012 compared to last year as first time-buyers took advantage of the Stamp Duty holiday, Building Societies Association data shows.
Ending on March 24 the rise in Stamp Duty on homes worth up to £250,000 saw of rush of first-timers in the sector.
There were 6,500 first-time buyer loans in March compared to just 3,100 last year with two-thirds benefiting from the tax relief.
Lending was up 58% in March compared to February and net lending rose for the sixth month in a row.
Mortgage approvals by mutuals were up 39% in March compared to last year and jumped 40% in Q1 2012 compared to Q1 2011.
Adrian Coles, director-general of the BSA, says the increases are partly down to the end of the Stamp Duty holiday.
He says: “Some purchase decisions are likely to have been brought forward as a result of the deadline so lending to first time buyers may dip slightly in coming months.
“More broadly, mortgage lending to those moving home or remortgaging was also up strongly.”
Coles says mutuals’ products make up three-quarters of the mortgage best buy tables while approval levels bode well for a strong summer.
There was a £266m fall in retail deposits in March compared to an increase of £273m in March 2011.
After interest credited is removed there was a net withdrawal of £945m in March.
Coles adds: “Attracting retail savings remains challenging when the bank rate remains at such a low level, wage growth stays below the growth in prices and real disposable household income is in falling.”
He says savings are now supplementing wages meaning he was unsurprised by the fall in deposits.