July’s figure is the highest monthly figure since data was first published for the mutual sector at the start of 2010.
The value of mortgage approvals in July also hit the highest level since 2010 at £4.2bn compared to £2.8bn in July last year.
In the first seven months of the year gross lending by the sector was £22.2bn, up by 30% compared to the £17.1bn lent in the same period last year.
This gives mutuals a 24% market share of gross lending in the year to July, up from 21% in the same period in 2012.
Brian Morris, head of savings policy at the BSA, said: “The figures for July confirm that the mutual sector continues to perform strongly in both of its core markets, mortgage lending and retail savings.
“In the mortgage market, net lending by the sector was £6.8bn in the seven months to July, whilst net lending by other institutions, such as banks, has been in negative territory.
“Mutuals are increasing their lending to the real economy, helping to boost economic activity in the UK.
“First-time buyers, and in particular those with smaller deposits are being actively supported by mutuals.”
The BSA’s figures revealed that lending to first time buyers has accounted for around 30% of lending by mutuals since the start of the year, with more than a quarter of that to first time buyers with a deposit of ten per cent or less.
Net new mortgage lending by mutuals was £1.3 billion in July and £6.8bn in the first seven months of the year which is greater than the total net lending by the sector across the whole of 2012.
