Gross lending by mutuals in December was £2.1bn was up 15% compared to December 2010.
Mortgage approvals also climbed 19% in December from £19.4bn to £23.1bn.
A total of £1.8bn of mortgages were approved by mutuals in December, up 49% on December 2010.
Adrian Coles, director-general of the BSA, said: “Activity in the housing market has been weak throughout 2011 with the number of transactions close to an all time low.
“New lending by mutuals, however, rose 16% in 2011 compared to 2010, whilst the UK's major banks recorded a small reduction in lending over the same period.
“The housing market faces significant headwinds over the coming 12 months but mutuals are poised to take on these challenges and continue to offer market leading rates and innovative products to home movers and first-time buyers alike.”
