Figures from the Building Societies Association (BSA) showed that gross lending completions rose slightly to £16,075m, whereas net lending, which totalled £3.3bn in Q2, was down by -38% on the previous year.
Joseph Thompson, business economist at the BSA said it was a challenging market for those looking to buy a home with choice limited by a falling number of properties coming on to the market and an inadequate supply of new builds.
He said: “House-prices have been rising faster than earnings putting additional financial pressure on homebuyers. These challenges can be seen in lower numbers of mortgage approvals. As none of these factors is likely to change this year, the number of property transactions is likely to remain relatively weak. Many homebuyers, especially those with a more complicated financial situation, prefer dealing with a building society as they can take a more personal approach to lending.”
The BSA said its members had a 29% market share for new mortgage approvals, dipping to 26% for gross lending.
Building societies held outstanding mortgage balances of £292bn in Q2, up by 5% on the same quarter last year and representing a 22% market-share.
Mortgage Advice Bureau head of lending Brian Murphy: “The report suggests that building societies accounted for nearly 30% of gross lending in the last quarter.
“This perhaps demonstrates that, given the current climate where certain types of borrowers may perhaps require a more pragmatic approach, building societies are able to assist as they are generally smaller than their banking counterparts.
“In addition, some of the regional societies have launched products to support underserved areas of the market, which have proven popular and therefore boosted mutuals’ market share.”
Murphy added that given the current market trends he expected building societies’ market share to remain steady or even grow slightly.