Gross mortgage lending grows at mutuals

Gross mortgage lending at mutuals and building societies grew by 10% in September, bringing the total figure for mortgage lending to £2.5 billion.

Mutuals are also taking an increasing share of the mortgage market, making up 22% of gross lending last month – up from 17% in September 2011.

“These lending figures show that building societies and other mutuals are continuing to increase their lending to help people buy their homes,” said Adrian Coles, Director-General of the Building Societies Association.

Recent research by The Telegraph showed that the largest share (over 60%) of “best buy” mortgages is offered by building societies.

This has been attributed to the fact that mutual organisations provide better deals for those who don’t have 25% equity in their homes and for first-time buyers.

Further data from leading money experts shows that four out of 10 of the best-buy savings accounts over the last 12 months have come from building societies.

Yorkshire Building Society has recently released four new mortgage products with interest rates under 3% all aimed at buyers with high equity.

However, Mr Coles argues that Banks of England’s Funding for Lending scheme, designed to offer banks borrowing at lower rates that those offered commercially with the idea that they pass these savings on to consumers, may still have an impact on the mortgage market and will “clearly appeal to many mutual lenders”.

Simon Embley, CEO at LSL Property Services, has also recently suggested that a second Funding for Lending-style scheme could be introduced 2014, specifically targeted at buyers with low deposits, such as first-time buyers.

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