Mass exodus from building societies as banks stabilise

Mass exodus from building societies as banks stabilise

Savers withdrew £2.2 billion from building societies in June, the most in a single month since records began in 1955.

This is compared to an inflow of over £400 million during the same month last year when savers, anticipating the collapse of banks, viewed building societies as a safer option.

However, with banks now stable and offering competitive interest rates, savers are returning.

Brian Morris, of the Building Societies Association, which released the figures, said the amount withdrawn from building societies was “not unexpected”.

“With rising unemployment, subdued income growth and the official Bank Rate at an historic low, it is very difficult to attract retail savings,” Morris said.

He added that low interest rates are encouraging households to “pay off debt rather than save.”

“These conditions are expected to persist into 2010,” he concluded.

BSA figures also revealed mortgage lending of £1.98 billion in June, an increase of almost a third compared to May, but down from £3.25 billion in the same month last year.

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