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Mutuals will fill lending gap left by big banks – brokers

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  • 01/03/2012
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Mutuals will fill lending gap left by big banks – brokers
Brokers are convinced the building society sector can fill the shoes of the high street banks in 2012, after a Mortgage Solutions poll revealed 64% of advisers have confidence the sector can do it.

Results season is in full flow and, so far, the biggest high street banks’ downward lending trend continues but is far from complete.

Coventry Building Society’s results out today made it the latest mutual to grow its gross mortgage lending figures, increasing gross advances from £3.5bn to £4bn in 2011.

However, both the UK’s biggest lenders by far, Lloyds Banking Group and Santander, lost market share and lent less in 2011 than the previous year.

Lloyds Banking Group’s gross mortgage lending dropped 6.7% to £28bn in 2011, dropping its market share down to around 28%. Santander’s mortgage market share also nudged down by 0.5% to 17.3% with £23.7bn of lending in 2011 – a fall of 2% on 2010.

The UK’s third biggest lender Barclays bucked the trend to lend £0.3bn more in 2011 at £17.2bn, driven by first-time buyers, higher LTV products and buy to let.

Meanwhile, in the mutual sector, with Nationwide yet to report, Yorkshire’s latest results showed it lent 46% more in 2011 at £4.1bn, with Skipton Building Society lending £1.7bn up from £0.5bn in 2010 and Leeds also boosting lending by 25% to £1.23bn.

However, with the rest of the year to play out, just over a third of brokers disagreed societies could fill the banking sector’s shoes in 2012.

BSA policy director Paul Broadhead said the mutual sector lent 16% more year-on-year and 30% more in January.

“I think we will continue to see bigger volumes from societies than we have in the past. At the tail end of last year we began to see more mutuals involved in buy-to-let and some of the customers with more complex circumstances are also finding the answer in our sector,” he said.

Broadhead chuckled and said mutuality is almost the “new black” with lots of positive publicity for the sector and model in general following the credit crunch.

“Funding will remain challenging as long as uncertainty remains on the Euro, but that will be a problem for both banks and building societies,” he said.

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