Building societies show strong performance in first nine months of 2023 – BSA

Despite challenging economic conditions, building society mortgages and savings balances increased between January and September 2023, according to the Building Societies Association (BSA).

In the same period, balances fell across the rest of the market.

There was a slowdown in mortgage market activity this year, as higher interest rates put a strain on affordability, and while lending volumes reduced compared with the same period last year, building societies accounted for over a quarter of all new mortgage lending, increasing their balances by £6.1bn.

Mortgage balances at other lenders reduced by £4.5bn, as borrowers repaid more than these mortgage providers lent out in the period.

The number of borrowers struggling to maintain their mortgage payments has started to increase during the period, but still remained low.

However, building societies’ lower-risk approach to lending decisions meant they had proportionately fewer loans in arrears.

Building societies provided more than 70,300 first-time buyer mortgages, accounting for nearly two-fifths of all building society lending.

Although many households used existing savings to cope with the increased cost of living, building societies attracted £18.9bn in cash savings during the first nine months of the year.

Savings balances at banks and other deposit takers fell by £6.7bn.

Based on the latest analysis, building society savers received £1.5bn more in interest than they would have got at major banks.

In the latest YouGov customer service survey, 95% of building society customers agreed that their provider offered good customer service.

This was the highest score since the survey began in July 2016, higher than 85% of bank customers.

Building societies outscored banks on all six customer service metrics, including 86% of building society customers agreeing that their provider offered competitive rates, compared with 72% of bank customers.

Building societies now account for 38% of branches, up from 17% in 2014, and 78% of building society customers agreed that their provider was an important part of the community in which they operate, compared with 53% of bank customers.