BSA: Building society pressure claims unfounded

The latest CBI/PwC Financial Services Survey revealed that the majority of financial services firms had seen rising business levels in the three months to December but said building societies were the exception.

As such some commentators have claimed that a lack of access to wholesale funding lines, which currently have exceedingly low rates, was behind reduced lending levels.

But Fieth said the decline in lending, which was experienced by all types of lenders, was due to an overall cooling of the market coupled with additional factors such as increased regulation.

He said: “A number of reports clearly show that mortgage demand and therefore lending across the whole market dropped back towards the end of last year.

“This was a function of a moderate cool-down in the housing market, caused by multiple factors including house prices and affordability.

“Mortgage regulation may also have had some part to play, although most likely related to consumer sentiment.”

And Fieth said the fact that societies were down in comparison to full service banks came as no surprise when people look at the types of additional business the banks are engaged in.

He said: “Given the mix of business that building societies do compared to the full service banks in the survey, it is hardly surprising that some societies reported a slow-down in business volumes in Q4.

“We have also seen the high street banks coming back more strongly into the mortgage market in recent months at least in some customer segments.

“That said, between the start of 2012 and the end of Q3 2014 net lending by building societies outpaced all other lenders by £34bn and I don't anticipate that this gap will narrow quickly.

"In many ways, provided that an orderly housing market is maintained going forward and we don't revert back to the pre-2012 slump in consumer confidence, a period of coming off the boil should prove to be a good thing, I certainly don't recognise some of the more emotive language in the headline of the report.”

Fieth’s comments follow on from a recent straw poll of BSA members which found that 57% reported an increase in the size of their pipeline when it is compared to January 2014.

The BSA anticipates gross mortgage lending to stand at £225bn in 2015.