Mutuals' gross lending and savings continue to strengthen

Lending and savings at mutuals in the UK are bucking the trend in challenging economic conditions according to new data that shows gross lending is at a 10 month high.

There was 6% rise in gross mortgage lending by mutuals in July, up to £2.1 billion from £2 billion in July 2010, a17% increase in gross lending for the first seven months of 2011 and £1.9 billion of mortgages approved by mutuals in July which is on a par with July 2010.
 
Savings balances were up £0.6 billion in July 2011, compared to a reduction of £1 billion in July 2010 last year. Excluding interest credited to accounts, mutuals saw a net receipt of £0.4 billion, compared to a net withdrawal of £1.3 billion at the same time in 2010.

‘Lending by mutuals is showing continued signs of strength in a relatively difficult operating environment. Gross lending by mutuals in July was at its highest level since September 2010, and in the first seven months of the year mutuals have approved an additional 16% worth of mortgages compared to the same period last year,’ said Adrian Coles, director general of the Building Societies Association.

‘This is an encouraging trend in the face of continued uncertainty in the outlook for the housing market given the challenges faced in the wider economy. Similarly it is encouraging to see a net receipt of savings by mutuals in July,’ he added.

Although savings in 2011 are likely to be significantly lower than last year, mutuals may benefit from any consumer withdrawal from equity investments as a consequence of current share price volatility, he believes.

Meanwhile, the Association of Financial Mutuals said that the financial mutual sector has grown its premium income by 13% and assets by over 8%. If the planned transfer of Cooperative Financial Services to Royal London goes ahead before the year end, the sector will have exceeded £100 billion in assets for the first time, equating to over 6% of the total UK insurance market.
   
AFM which was launched 18 months ago has capitalised on this, attracting a number of new members and developing a wide range of services.
 
‘These results show how the sector has grown and how much potential it has to grow further, as a result of renewed interest from Government and consumers who see the mutual sector as a viable alternative to share holder owned companies,’ said Martin Shaw, chief executive officer of the AFM.