The increase took gross lending in August to £4 billion compared to £3 billion in August 2012 but the number of loans approved across the whole market is, however, still well below the historic average.
Gross lending in the first eight months of the year was £26.1 billion, 30% higher than the same period in 2012 and the market share of gross lending in the first eight months of 2013 is 24% up from 21% in the same period last year.
One in three new loans from mutuals in August were made to first time buyers of which 29% were made to borrowers with a deposit of 10% or less and the data also shows that net new mortgage lending, that is gross lending minus repayments and redemptions, was £1.2 billion in August, up 26% on the same month last year.
For the first eight months net new lending was £8.2 billion an increase of 87% on the same period in 2012. The £8.2 billion of net lending by mutuals in the eight months to the end of August 2013 more than offsets the negative lending figures for other lenders, so that across the UK total net new lending into the UK housing market has been £5.6 billion.
‘Mutual lenders have sustained their activity in, and support for, the UK housing market and home buyers over the long term. Consumer sentiment has now clearly turned the corner and is beginning to improve,’ said Adrian Coles, director general of the Building Societies Association.
‘However, sentiment can be fragile and it is vital that unexpected surprises and overheated rhetoric are avoided. Viewing today's market in context, it is certainly getting better, however, the number of loans approved for house purchase in the past three months ran at around 60,000 a month, less than two thirds of the historic average,’ he explained.
He pointed out that to deliver solutions to the growing housing needs of the UK and to provide balance to the supply and demand equation that drives prices more homes need to be built.
‘We welcome the focus from all political parties on the imperative to address this and other housing issues. This attention has been evident both from the platform speeches and plethora of housing related fringe meetings at party conferences. This is a debate in which the BSA and its members will remain active as policies develop. Following David Cameron's announcement over the weekend we may see some lenders start to take Help to Buy: mortgage guarantee applications,’ said Coles.
‘Savers are also clearly continuing to choose mutual providers in large numbers as a safe place for their savings. The mutual sector continues to be well represented in the best buy tables even as the low Bank Rate, coupled with other external factors, sets the scene for a low rate environment which is likely to go on for some time yet,’ he added.
Figures from the Bank of England show an uptick in mortgage lending in August with an overall £500 million pick up for house purchases to £11.3 billion. But remortgage activity was slightly weaker and dragged overall gross mortgage lending a little lower, at £16.4 billion.
Bob Pennell, chief economist at the Council of Mortgage Lenders said that underlying approvals data signal healthy house purchase and remortgage demand going forward.
