Unsurprisingly savers are turning to building societies as a home for their cash at present. Adrian Coles, Director-General of the BSA commented, "A turbulent stock market and greater anxiety over job prospects mean that people are increasingly viewing their tried and trusted building society as an excellent home for their money".
One would have thought that these funds would go back out as mortgage advances however this would appear to not necessarily be the case as Mr Coles went on to say that, "Activity in the housing market continues to be depressed, and the approvals figures suggest this is likely to continue for some time. Recent falls in house prices have been widely publicised, reducing potential buyers' confidence and keeping them out of the market. And with societies seeking to maintain high quality loan books, societies have chosen to follow a policy of conservative lending that has further reduced the amount of mortgage business they have undertaken."
Building society statistics July 2008
· Building societies had net receipts of £1,435 million in July 2008 compared to £723 million in July 2007.
· Building society net withdrawals from cash ISAs in July 2008 were £228 million compared to net receipts of £167 million in July 2007.
· Building society gross lending amounted to £3,300 million in July 2008 compared to £4,417 million in July 2007.
· Net lending by building societies in July 2008 was -£79 million compared to £506 million in July 2007.
· Approvals in July 2008 were £2,511 million compared to £3,928 million in July 2007.
