Consumers are turning to mutuals

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HOUSEHOLD finances will remain under pressure this year, as the threat of unemployment and low wage growth forces Britons to tighten their belts, according to new research.

The study by the Building Societies Association (BSA) also suggests that more consumers are placing their savings with mutuals. Gross lending by building societies and other mutuals in 2011 was £23.6bn, a rise of 16 per cent compared to 2010.

Gross lending by mutuals in December was £2.1bn, a rise of 15 per cent compared to December 2010. There was also a 19 per cent rise in mortgage approvals in 2011 to £23.1bn.

Adrian Coles, the director-general of the BSA, said: “The housing market faces significant headwinds over the coming 12 months but mutuals are poised to take on these challenges and continue to offer market leading rates and innovative products to home movers and first-time buyers alike.

“Growth in savings balances at mutuals increased significantly in 2011 compared to previous years although it is clear that savers are still struggling to save as much as they would like.

“The fall in the rate of inflation may offer some breathing space to households but if conditions in the labour market continue to deteriorate and wage growth remains low, household finances are likely to remain squeezed for some time to come.”

The Building Societies Association (BSA) represents mutual lenders and deposit takers in the UK, including all 47 UK building societies.