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Ash4781

Building Societies' May'09 Data

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BUILDING SOCIETY LENDING STEADY, BUT REMAINS DEPRESSED

Date: 29 Jun 2009

Gross mortgage lending by building societies was £1,515 million in May 2009, compared to £3,530 million in May 2008.

Commenting on mortgage figures, Adrian Coles, Director-General of the BSA, said:

“Gross mortgage lending by building societies was £1,515 million in May 2009, a similar level to the previous two months, but still 57% lower than gross lending in May last year. Building society mortgage approvals were also at similar levels to recent months. However, the £1,607 million of approvals in May were still about 35% lower than the value of mortgages approved in May last year. Therefore, while the mortgage market appears to have recovered slightly from the start of the year, levels of activity remain depressed.â€

In the savings market, savings balances held by building societies reduced by £106 million in May 2009, compared to an increase of £1,162 million in May last year. This is due to building societies experiencing a net withdrawal of £494 million in May this year, compared to a net inflow of £855 million in May last year.

Commenting on the savings figures, Mr Coles said:

“Competition for retail deposits remains intense, as all institutions continue to find their access to wholesale funding markets restricted. However, those banks that are supported by the State are able to compete unfairly for retail deposits, and steps need to be taken to ensure that Government backing for some institutions does not distort competition for savings.

“These pressures are exacerbated by the current low interest rate environment. There is evidence that households are looking to repay debt rather than save, and it is possible that there will be a net withdrawal (before interest credited) from the total UK savings market in 2009.

“Overall, building societies offer attractive savings accounts are trusted by savers. As a result, societies have attracted substantial inflows since the financial crisis began.â€

Building society statistics May 2009

* Building society gross lending was £1,515 million in May 2009 compared to £3,530 million in May 2008.

* Net lending by building societies in May 2009 was -£752 million compared to £142 million in May 2008.

* Mortgage approvals in May 2009 were £1,607 million compared to £2,477 million in May 2008.

* Including interest credited, savings balances held by building societies decreased by £106 million in May 2009, compared to a £1,162 million increase in May 2008.

* Building societies had a net withdrawal of £494 million in May 2009 compared to net receipt of £855 million in May 2008.

* Building societies had a net withdrawal of £416 million from Cash ISAs in May 2009, compared to net receipts of £272 million in May 2008.

Desperate times for the building societies. Policy makers better look at these market distortions. THe BSA have been saying they have problems for a while now (competitive savings, and difficult to access wholesale markets)

Edited by Ash4781

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That's bleak. Any idea on what people are spending their savings on - mortgage payments, reducing other debts, paying bills or luxury items/holidays etc?

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Not sure paying down debt I guess but it does say in article below wholesale was also negative. Looks to me that deflation is taking hold.

...

The level of savings held by building societies dropped by £106 million during May, as consumers withdrew £494 million, while funding through the wholesale money markets was negative.

A BSA spokeswoman said: "There are problems in the wholesale markets and challenges attracting savers.

"But there is also a lack of demand as people wait for the housing market to recover. In a declining market it is prudent to cut back on lending."

The problems in the sector, combined with a fall in the number of specialist lenders who are still writing new business, is intensifying the ongoing mortgage drought.

http://www.google.com/hostednews/ukpress/a...6s77CKzAWxM0wfg

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That's bleak. Any idea on what people are spending their savings on -

Well, ive just spent £15K out of my savings form the nationwide, a 12 month 6.5% bond just matured so.....I bought a real luxury....3 year index linked savings certificate from NS&I.

The government are a bunch of thieving c**nts but It's nice to put your money somewhere they wont tax it. The BS and Banks can FO till they start offering decent savings rates compared to their lending rates and compared to real inflation and stop paying out bonuses from tax payers money.

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Isn't that the worst possible scenario, people not having high "inflation expectations", trying to increase savings and also running down those savings

while taking out an increased rate of unsecured loans.

No fear of inflation yet unable to live day to day.

Edited by Tom Peters

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Building society statistics May 2009

* Including interest credited, savings balances held by building societies decreased by £106 million in May 2009, compared to a £1,162 million increase in May 2008.

* Building societies had a net withdrawal of £494 million in May 2009 compared to net receipt of £855 million in May 2008.

* Building societies had a net withdrawal of £416 million from Cash ISAs in May 2009, compared to net receipts of £272 million in May 2008.

Sounds good doesn't it when lenders are now reliant on deposits.

Little wonder BSA's Adrian Coles recently said:

Despite being skewed towards more secure retail deposits, 30pc of the sector’s funding – or around £100bn – comes from institutions, who may think twice following the Moody’s downgrade, and the wholesale markets, which remain effectively closed. Without funding, mortgage lending will dry up. “To the extent that funding is restricted, it will restrict our ability to lend,†Nationwide chief executive Graham Beale told the TSC. The BSA’s Adrian Coles reckons “it is quite conceivable that lending will fall this year†as funding evaporates.

And today in relation to the BOE figures the FT said:

Lending to consumers and businesses suffered a setback in May, highlighting the threat to nascent green shoots from weak levels of credit.

Net lending secured on dwellings did not grow during the month, the worst performance since records began in 1993, the Bank of England said. The annual rate of lending growth of 1.3 per cent was also the slowest pace on record, and compares with a 11 per cent growth rate before in late 2007.

“The minimal rise in mortgage approvals in May underlines the continued fragility of the housing market,†said Seema Shah of Capital Economics. “At this rate, mortgage approvals are unlikely to return to levels which historically have been consistent with stable prices until late next year.â€

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Building society statistics May 2009

* Including interest credited, savings balances held by building societies decreased by £106 million in May 2009, compared to a £1,162 million increase in May 2008.

* Building societies had a net withdrawal of £494 million in May 2009 compared to net receipt of £855 million in May 2008.

* Building societies had a net withdrawal of £416 million from Cash ISAs in May 2009, compared to net receipts of £272 million in May 2008.

Sounds good doesn't it when lenders are now reliant on deposits.

Little wonder BSA's Adrian Coles recently said:

And today in relation to the BOE figures the FT said:

Sybil, take your meds, you're obsessed...... :lol::lol::lol::lol:

BTW, isn't the point of throwing a strop and leaving that you last more than a few hours before you come back looking for attention????

Edited by HAMISH_MCTAVISH

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In the savings market, savings balances held by building societies reduced by £106 million in May 2009, compared to an increase of £1,162 million in May last year. This is due to building societies experiencing a net withdrawal of £494 million in May this year, compared to a net inflow of £855 million in May last year.

Is savings / debt two sides of the same coin? I.e. if net borrowing is negative, i.e. we are paying back our loans, then surely that reduces the money supply and therefore there will be less savings.

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