Gross lending by building societies climbed by 22% in the third quarter compared to the same period in 2020, new figures published by the Building Societies Association (BSA) have revealed.

The figure reached £16.9bn, having risen from £13.9bn in Q3 2020.

Building societies now hold outstanding mortgage balances of £351.2bn, which is a 23% share of the total mortgage market, the BSA confirmed.

Elsewhere, the figures also showed that savings balances at building societies have grown strongly, having increased by £4.2bn in Q3 2021 – a figure three times the £1.4bn increase in the third quarter of 2020.

Building societies currently hold savings balances of £328.2bn, a total up 10% on Q3 last year when it was £297.3bn. The BSA’s data also showed that cash ISA balances held with building societies increased by £0.2bn in Q3 this year, compared to a decline of £3.6bn across the market as a whole.

Commenting on the data, BSA chief economist, Andrew Gall, said that the strong level of mortgage lending activity in the third quarter by building societies, and across the wider market, suggests that the tapering of the stamp duty holiday has not been a major barrier to property purchase.

“It is likely that households will continue to re-evaluate their housing needs in the post-pandemic world, which will to continue to support demand into the new year,” Gall added.

“The Bank of England is sounding like it is ready to increase the bank rate from its historically low level of 0.1% over the coming months. Whilst this may see some mortgage rates rise, the vast majority of households are on fixed term products and so won't see any immediate change to their monthly repayments.

“Savings balances have also grown at building societies in the period and it’s particularly pleasing to see an inflow to cash ISAs, despite a £3.6bn outflow across the market.”

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