Building societies appealing to savers

Last month, building societies saw record savings as savers escaped Northern Rock and headed for the safety of traditional mutual savings.

A net inflow of £3.02 billion was noted in October to the 59 remaining building societies in the UK, this was over 4 times the £772 million deposited in October 2006.

Adrian Coles, director general of the Building Societies Association, said it seems that the majority of these deposits are funds withdrawn from the Northern Rock Bank, with the attractive savings products offered by building societies continuing to appeal to customers looking for the best home for their money.

Mr Coles added that although building society lending in October was greater than in previous months, activity is still subdued in comparison to 2006, with gross advances amounting to £4,654 million in October, compared to £4,936 million in October 2006.

The mortgage market looks set to cool further as the impact of the higher interest rates and tighter credit conditions more generally continue to filter through concluded Mr Coles.

The increase in building society savings show that the Government’s promise to guarantee existing and new savings at Northern Rock has done little or nothing to put the public’s minds at rest.

Discuss this in the Finance Markets forums

Story link: Building societies appealing to savers