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BSA says mortgage lending remains low for December

Gross mortgage lending was GBP2.39 billion and net lending was GBP324 million

The UK’s Building Societies Association (BSA) has reported that gross mortgage lending by building societies was GBP2.39 billion in December 2008, down on the GBP2.59 billion seen in November 2008 while net receipts into building societies were GBP897 million in December 2008, up from GBP636 million in November 2008.

The Building Societies Association reported that net lending by building societies in December 2008 was GBP324 million, compared to GBP1.05 billion in December 2007.

Building societies had net receipts of GBP897 million in December 2008, compared to GBP1.89 billion in December 2007. Building societies had a net withdrawal of GBP212 million from cash individual savings accounts (ISAs) in December 2008, compared to net receipts of GBP46 million in December 2007.

Adrian Coles, director general of the BSA, said: Activity in the housing market remains very depressed, and as a result the amount of mortgage lending in December was low. House prices are widely expected to fall further and unemployment is rising, so potential buyers remain cautious and are staying out of the market as they wait for it to stabilise.

Despite the Bank of England’s official interest rate reducing to 2% in December, building societies were able to attract funds by providing competitive interest rates on savings accounts and being trusted as a safe place for deposits. December’s figure could also have been boosted by deposits made from compensation paid to customers of the failed Icelandic bank Icesave.