Gross lending by building societies increased 44% year-on-year in July, the BSA said.
Mutuals lent £3.1bn in July compared to £2.1bn in the same month the year before. Lending also increased 14% on June’s figures, which stood at £2.7bn.
The number of mortgages approved by mutuals was up 47% in July, at 2,786, compared to the same month last year at 1,891.
Adrian Coles, director-general of the Building Societies Association, said: “Mutuals are currently enjoying a sustained increase in lending activity, and an increase in deposits from savers.
“Lending activity by mutuals has been growing strongly on a year-on-year basis for some time now, and in July gross lending rose again by a healthy 44%. At the same time lending by banks fell by 9% in July. As a result mutuals continue to take market share, up to 24% in July, well above the 17% figure for the same month on 2011. Approvals by mutuals were also up in the month and this means that this trend of increased lending is likely to continue.”
Coles added that the Funding for Lending scheme has not influenced the BSA’s figures and may not start to for a number of months.
Ben Thompson, managing director of Legal & General Mortgage Club added that building societies are leading the market in terms of product innovation.
“We have seen interesting deals including Leeds Building Society’s two-year fixed rate on 80% LTVs, which rivals many mortgages offered with LTVs of 75% and 70%.
“A lot of these products have been aimed specifically at first-time buyers, which is where we really need to see a boost if we are to head towards recovery. The mortgage market as a whole needs to be opened up, with lenders moving to accommodate the borrowers who have so far been under-serviced.
“At the minute, this is largely first-time buyers and those deemed to be ‘riskier’ customers. Whilst lending rates are enjoying periods of historic lows, it is significantly harder to secure a loan now than it has ever been previously.”
Thompson added that other lenders should follow suit by moving up the ‘risk curve’ and help to increase the overall level of lending.
