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Big inflows for societies as net lending plummets

Net mortgage lending dived by 40 per cent in April to 666m from 1.1bn in the same month last year, according to figures from the Building Societies Association.

Gross lending fell to 3.65bn from 3.77bn. Mortgage approvals were 3.18bn, down from 3.75bn.

Bank of England figures show that approvals for purchase in April fell to a 15-year low at 58,000 from 63,000 in the previous month and the 12th consecutive monthly fall. But it reports an increase in the number of approvals for remortgaging, from 98,000 in March to 106,000 in April.

The BSA has seen the highest-ever monthly inflow to cash Isa accounts, resulting in savings inflows for building societies of 1.8bn, compared with 1.35bn in April 2007. Director general Adrian Coles says: “Although approvals picked up slightly from March, they are still down on last year and mortgage activity will be subdued in the coming months.”

“However, the record savings figures mean that societies, unlike some wholesale funded lenders, have funds available for mortgage lending. Despite the distressed mortgage market, building societies remain open for business – every society issued new mortgages during April – and are able to lend.”

LibDem Shadow Chancellor Vince Cable says: “We are seeing a massive hangover from the housing boom built on a binge of cheap credit.With house prices falling, food and fuel costs rising and the continuing credit crunch making borrowing less affordable, it is no surprise that the housing market is grinding to a halt.”

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