The Bank of England mortgage market data was released by the Building Societies Association (BSA) in its analysis of mutuals’ lending.
According to the data, building societies’ share of the UK mortgage market dipped slightly in 2017 as they completed 25% of all lending, compared with 27% in 2016.
The sector lent £64.1bn in 2017, down 3% from £66.4bn in 2016, and accounted for 29% of new mortgage approvals in 2017.
The mutual sector also saw a slight dip in the number of mortgages approved, with 442,996 loans granted last year compared to 448,222 in 2016.
Overall, monetary financial institutions, which include banks and building societies, lent £237.99bn – increasing their share to 92.5% of the market.
Meanwhile other specialist lenders lent £14.65bn for a 5.7% share of the market – down from £16.68bn and 6.8% respectively in 2016.
Other firms lent £4.5bn, up from £3.75bn, to lift their market share from 1.5% to 1.8%.
Q4 of 2017 was particularly sluggish for building societies with gross mortgage lending of £15.6bn – 5% lower than the £16.4bn in Q4 2016.
Mortgage approvals during the final three months of 2017 were down 6.3%, falling from 109,608 in Q4 2016 to 102,709.
BSA chief executive Robin Fieth (pictured) noted the last 12 months had been tough with consumer confidence falling.
“This is unlikely to change until there is more clarity around the UK’s future relationship with the EU,” he said.
“This uncertainty may put some homebuyers off buying in the near term. However, the labour market is robust and unemployment remains low as do interest rates, so the wider economic environment will support the mortgage market to some extent.
“In addition to highly competitive mainstream mortgage products, the sector’s niche lending is what supports a diverse mortgage market,” he added.
Savings hit hard
Mutuals’ savings business was also significantly hit, with balances rising by £8.5bn, down 54% on the £18.6bn increase in 2016.
Savings balances across the whole market increased by £45.9bn, giving building societies a 19% share of new savings deposits, and mutuals hold savings balances of £268.8bn, 18% of the total market.
Fieth continued: “The fall in savings growth in 2017 corresponds with a significant flow of money into other retail investment products. This suggests that savers have been chasing higher returns in riskier markets.
“Households have also been dealing with consumer prices rising faster than wages, making it more difficult to save. In last year’s tougher conditions building societies traded strongly.”
He added that with inflation potentially at its peak and the hope of strong wage rises, consumers could return to cash savings.