Building Society Lending Hits Record High but Major Banks Dominate Large Mortgage Market

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New figures from the Building Societies Association have revealed that building society lending has reached its highest level since records began in 2010. Building societies are now taking a larger share of gross mortgage lending than before with the mutual sector responsible for over £22 billion of mortgages in the first seven months of 2013.

However, Council of Mortgage Lenders figures for 2012 show that the main banks continue to dominate the UK’s large mortgage market. We look at the rise of building societies and reveal the UK’s top ten lenders in 2012.8

Building societies lend over £22 billion between January and July

Building Societies Association (BSA) figures show that gross mortgage lending by mutual lenders reached £4 billion in July, an increase of 30 per cent compared to the same month in 2012. This is also the highest figure since individual data was first published for the mutual sector at the start of 2010.

The value of mortgage approvals in July also rose sharply, increasing from £2.8 billion last July, to £4.2 billion for the corresponding month this year. Mutual lenders have agreed a total of £22.2 billion of mortgages in the first seven months of 2013, up from £17.1 billion in the same period last year.

Brian Morris, head of savings policy for the BSA, said, “These figures confirm that the mutual sector continues to perform strongly in both of its core markets, mortgage lending and retail savings.

“Mutuals are increasing their lending to the real economy, helping to boost economic activity in the UK, with first-time buyers, and those with smaller deposits being actively supported.”

While building societies continue to increase their market share it is the major banks that continue to dominate the mortgage market, as we see next.

Major banks dominate large mortgage market

New figures from the Council of Mortgage Lenders have revealed the 10 banks and building societies responsible for the most mortgage lending in 2012. The UK’s biggest lender remained the Lloyds Banking Group who lent £26.2 billion of mortgages in 2012, equivalent to a market share of 18.3 per cent.

Nationwide was the UK’s second biggest lender last year with gross lending rising from £17.2 billion to £21.2 billion. Barclays retained third place despite a fall in gross lending from £20.1 billion to £18.2 billion while HSBC entered the top five having increased its market share from 9.3 per cent to 11.5 per cent. Santander made up the top five.

Islay Robinson, CEO of London mortgage advisor and high value mortgage specialists Enness Private Clients said: “It’s great to see that building societies are increasing their share of the large mortgage market. Often they can offer bespoke and innovative products and this competition can only be good for the sector.

“However, the latest CML figures show that the big six banks are still responsible for almost eight out of every ten pounds of mortgages lent in the UK and so continue to dominate the market.”

The top 10 mortgage lenders in full (market share in brackets)

1. Lloyds Banking Group (18.3 per cent)

2. Nationwide (14.8 per cent)

3. Barclays (12.7 per cent)

4. HSBC (11.5 per cent)

5. Santander (10.2 per cent)

6. Royal Bank of Scotland (9.7 per cent)

7. Coventry BS (3.6 per cent)

8. Virgin Money (3.4 per cent)

9. Yorkshire BS (3.2 per cent)

10. Clydesdale Bank (2.2 per cent)

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