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Building societies lend more to homebuyers Mortgage approvals at five-month low, says Bank of England
(about 3 hours later)
The UK's building societies have reported a surge in lending over the last year. The number of mortgage approvals in the UK fell to a five-month low in February, according to the latest figures from the Bank of England.
The Building Societies Association (BSA) said its members had increased lending to homebuyers by nearly a third since 2012. The Bank said there were 51,653 mortgage approvals in February, the lowest since September last year.
They lent £2.5bn in February this year, a 29% increase on the same month a year ago. The news comes in spite of other recent signs of improvement in the housing market.
Both the Halifax and the Nationwide have reported recently that prices are now rising.
Brian Murphy of the Mortgage Advice Bureau said: "The fact that overall mortgage approvals slipped again - with house purchase approvals down for the second successive month - shows how important it is to encourage more activity in this area."
'Keen to lend'
Also on Tuesday, the Building Societies Association (BSA) reported a big increase in the amount its members are lending to homebuyers.
Building societies lent £2.5bn in February, the BSA said, a 29% increase on the same month a year ago.
As some banks have cut back on mortgage lending, building societies have been taking a greater share of the market.As some banks have cut back on mortgage lending, building societies have been taking a greater share of the market.
They were responsible for 23% of all the UK's home loans in February, compared with 18% in 2012.They were responsible for 23% of all the UK's home loans in February, compared with 18% in 2012.
"Building societies are keener to lend than some of the banks and they have been winning back market share," said Simon Tyler, a mortgage broker based in Surrey."Building societies are keener to lend than some of the banks and they have been winning back market share," said Simon Tyler, a mortgage broker based in Surrey.
Figures from the Bank of England show that RBS, Santander and Lloyds all reduced lending last year.
Building societies have seen an increase in deposits from savers and are keen to lend that money out.
Smaller depositsSmaller deposits
The government introduced its new Help to Buy scheme on 1 April, which allows homebuyers to put down a deposit of just 5%.The government introduced its new Help to Buy scheme on 1 April, which allows homebuyers to put down a deposit of just 5%.
But the BSA said it was a shame that such a scheme was needed. And it maintained that building societies asked borrowers for smaller deposits than banks.But the BSA said it was a shame that such a scheme was needed. And it maintained that building societies asked borrowers for smaller deposits than banks.
"If all lenders acted to help first-time buyers and other creditworthy borrowers with smaller deposits, as mutuals have done consistently over the last year and more, this intervention would not be needed," said Paul Broadhead, the head of mortgage policy at the BSA."If all lenders acted to help first-time buyers and other creditworthy borrowers with smaller deposits, as mutuals have done consistently over the last year and more, this intervention would not be needed," said Paul Broadhead, the head of mortgage policy at the BSA.
The government's Funding for Lending Scheme (FLS) may also have contributed to the increase in borrowing.The government's Funding for Lending Scheme (FLS) may also have contributed to the increase in borrowing.
Under FLS, banks and building societies are able to borrow money from the Bank of England at cheap rates, providing they lend it out to individuals and businesses.Under FLS, banks and building societies are able to borrow money from the Bank of England at cheap rates, providing they lend it out to individuals and businesses.