According to Octane Capital, which collated data from the Building Societies Association, this continues a trend from 2021 when gross lending rose by a third compared to the previous year to £71.3m.
The firm said that over the past few years gross lending of building societies has been decreasing, standing at £68.9bn in 2018 and then falling 6.2 per cent to £64.6bn in 2019.
During 2020 when the pandemic hit there was a further fall of 17.1 per cent year-on-year to £53.3bn.
However, Octane Capital said that while the pandemic had accelerated the decline its subsequent impact on “how we work, earn and borrow may have also helped spur a revival”.
The company said that there had been a period of demutualization throughout the 1980s and 1990s which saw the number of societies fall from 481 in 1970 to 43 today.
It continued that many had changed from the “traditional lending function and started “aligning themselves more closely with big bank lenders”.
Octane Capital said that this “blurred the lines between building society and bank at the expense of its previous member base”, leading many to think that the building societies were on the wane.
Jonathan Samuels (pictured), Octane Capital’s chief executive, said: “It’s fair to say that building societies lost their way in recent years and in their attempts to match the might of the big banks, they alienated the very borrowers that had helped build them from the ground up.
“However, it does seem as though they’ve come back into fashion and perhaps ironically, this has been due to the impact of the pandemic, despite the fact that it initially accelerated their decline.”
He explained that there had been a rising number of self-employed people, and an increased number of people with “thin or poor credit files”. He added that there was greater need for lending to first-time buyers and downsizers.
“These niche consumers often tend to struggle when it comes to obtaining a mortgage via a big bank and this has presented building societies with the opportunity to re-carve a niche and return to their bread and butter proposition. Should they continue to serve a distinct purpose within the lending sector, we can expect to see further growth over the coming years,” Samuels noted.
