Prior to Q4, approvals and gross lending last year had increased quarter-on-quarter, climbing from £12bn and 92,606 approvals at the end of Q1 to £12.5bn and 94,458 approvals by the end of Q2, figures from the Building Societies Association (BSA) showed.
By Q3 mortgage approvals had reached 96,458 before falling to 89,654 by the end of the year.
Head of mortgage policy at the BSA Paul Broadhead (pictured) said there was likely to be a further slowdown of the mortgage market this year as economic pressures took hold.
“We saw mortgage demand come off the boil at the end of last year,” he said.
“Now, uncertainty around the general election and matters further afield like the fate of Greece and the eurozone may well have a dampening effect although consumers should take heart from the fact that mortgage availability is good.”
Aggressive pricing strategies from the major high street lenders have been named as one cause of the drop off in building society activity towards the end of last year.
Commenting on a report released by the Confederation of British Industry, the BSA’s chief executive Robin Fieth said high street banks were using loss leading products to increase their business volumes.
As an alternative strategy to flooding the market with 60% sub-2% rates the smaller building societies are focusing on underserved areas of the market where they can take advantage of not being reliant on an automated underwriting system.
The chief executive of Ipswich Building Society, Paul Winter, revealed today its decision to help borrowers under the mortgage transitional rules was part of its lending growth strategy.
“I don’t like referring to these types of borrowers as a niche market,” said Winter. “They are not niche – they are underserved. The FCA [Financial Conduct Authority] responded to demands from the industry that there should be a set of rules in place to help existing borrowers who didn’t fit the MMR requirements so we are surprised at the conservatism among lenders to use them.”