By Claire West
Gross mortgage lending by mutuals was £2.0 billion in October, a 10% reduction on the £2.2 billion lent in September, but broadly similar to the average of £2.0 billion over the preceding three months. Mortgage approvals fell by 8% in October to £1.8 billion from £1.9 billion in September.
Commenting on the figures, Adrian Coles, Director-General of the BSA, said:
"Lending activity across the market has shown signs of weakening in recent months. Although lending by mutuals fell in October, gross lending remains similar to the average over the preceding three months. Reports of falling house prices and government spending cuts have lowered consumer confidence which has put further downward pressure on demand for mortgages.
"An encouraging trend in recent quarters, however, has been the growth in mortgage approvals at mutuals and this may lead to some recovery in mutuals' market share over the next few months."
Savings balances held at mutuals decreased by £1.1 billion in October, following a decrease of £0.6 billion in September. Excluding interest credited to accounts £1.3 billion was withdrawn in October, compared to £0.8 billion in September.
Commenting on the savings data Coles said:
"The current economic climate is proving challenging for households. Consumer price inflation remains above average earnings growth and the labour market remains fragile. This is squeezing household finances and many are using their savings to supplement their incomes or to pay off debt. The low interest rate environment is also proving a continued challenge to attract savings."