Building society lending remains subdued

Gross lending by building societies was subdued in January at £1bn, a drop from £1.8bn in December, as funds for mortgage lending remained unavailable.

The latest monthly figures from the Building Societies Association (BSA) also reveal that mortgage approvals in January were £0.8bn, a drop compared to £1bn in December.

Adrian Coles, director-general of the BSA, said it was evident that activity in the market was subdued.

Coles said: "Low activity in the month was expected following the surge of buyers aiming to beat the end of the stamp duty relief in December. The adverse weather conditions experienced at the start of the year have further suppressed market activity."

But the BSA said it is not possible to make comparisons with previous years' data because from this month, in relation to data for January onwards, the Bank of England has combined the figures for building societies and mutually owned banks. The new data is reported as the ‘mutual sector'.

In the savings market, balances held in savings accounts at mutual institutions fell by £481m in January. Excluding any interest credited to accounts, mutuals experienced a net withdrawal of £755m.

Coles, said: "Mutuals will continue to find it difficult to attract savers as long as the base rate remains low and the market is distorted by part nationalised banks."