The Building Societies Association (BSA) has reported encouraging lending figures for August. Mortgage approvals lifted by 10% on July this year and were up 17% compared with August 2010. Gross mortgage lending reached an 11 month high in August lifting to £2.1bn and marked an increase of 8% on the figures for August 2010.
These figures are indicative of the improved mortgage rates on offer and an increased level of competition between lenders. Mutual lenders have been showing a real appetite to compete in the mortgage market and have also been amongst the more innovative providers.
Some of the mortgage deals on offer from mutual lenders are extremely competitive and in a market where consolidation has been rife (both in the banking and mutual sector) it is good to see that they can continue to provide some much needed competition.
As well as competing for mortgage business on price Building Societies have often been some of the first lenders to move back into lending to first time buyers without a large deposit. Lenders like Skipton BS and Cambridge BS both offer mortgages up to 95% of the purchase price whilst others have developed products that can help through the use of parental guarantees.
The improved picture for mortgage borrowers generally was also backed up by figures from the Bank of England, which showed that mortgage rates are now the lowest on record. However mortgage availability remains constrained and tougher criteria coupled with the need for bigger deposits continues to make life difficult for prospective first time buyers. The BSA also pointed out that the deteriorating economic outlook could spill over into the housing market, causing further weakness.