Mutuals defy the downturn to increase lending

BRITAIN’S mutuals increased their levels of lending in early 2011, despite the economic problems caused by the crisis in the euro zone and the uprisings in Egypt and Libya.
By The Newsroom
Published 31st Aug 2011, 07:00 BST

Figures released by the Building Societies Associations (BSA) revealed that there was a six per cent rise in gross mortgage lending by mutuals in July, up to £2.1bn from £2bn in July 2010.

There was a 17 per cent increase in gross lending by mutuals for the first seven months of 2011 to £12.3bn.

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Altogether, mortgages worth £1.9bn were approved by mutuals in the UK in July, on a par with July 2010.

Adrian Coles, the director-general of the Building Societies Association, said: “Lending by mutuals is showing continued signs of strength in a relatively difficult operating environment.

“Gross lending by mutuals in July was at its highest level since September 2010, and in the first seven months of the year mutuals have approved an additional 16 per cent worth of mortgages compared to the same period last year.

“This is an encouraging trend in the face of continued uncertainty in the outlook for the housing market, given the challenges faced in the wider economy.

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“Similarly, it is encouraging to see a net receipt of savings by mutuals in July, especially when the ability of many households to save is being eroded by persistently high inflation and low wage growth.

“A recent deterioration in labour market conditions has added to the pressure for many households, and may further dampen consumer confidence.

“Consequently, total household savings in 2011 are likely to be significantly lower than last year.

“Mutuals, however, may benefit from any consumer withdrawal from equity investments as a consequence of current share-price volatility.”

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According to the Association of Financial Mutuals, the financial mutuals sector grew its premium income by around 13 per cent in the financial year 2009 to 2010.

Martin Shaw, the chief executive of AFM, said: “These results show how the sector has grown and how much potential it has to grow further, as a result of renewed interest from Government and consumers who see the mutual sector as a viable alternative to shareholder-owned companies.”

Related topics:BritainEgypt