Research by the Council of Mortgage lending shows that lending by Britain’s building societies has slumped in the past few months. Total mortgage lending in March was down by £1 billion on the same level last year. It also shows that building socities have been hit harder by the credit crunch that the big banks.
Building societies typically fund their mortgage lending mostly from savings. (about 70%) in the current climate they have had difficulty raising additional funds for mortgages. Instead building societies have been focusing on attracting saving deposits.
Ironically, the mortgage market has changed so much that building societies no longer want to appear at the top of the ‘best buys for mortgages’ because they then struggle to deal with the demand coming in.