1.2 million new building society savings accounts opened last year

03 March 2009 / by Rachael Stiles
More than one million people opened a new building society savings account in 2008, the Building Society Association has revealed.

The research shows that even though interest rates have fallen sharply on savings accounts, Brits are still eager to save.

"The low interest rates that we currently have reduce the incentive to save, but the popularity of building society savings accounts is such that an additional 1.2 million accounts were opened over the last twelve months," BSA director general Adrian Coles said.

While building societies suffered a net £390million outflow of funds from savings accounts in January 2009, this is to be expected for the time of year and once this is taken into account, inflows were healthy, according to the BSA.

"The withdrawal represents less than 4% of the total net receipts received by building societies in 2008," Mr Coles explained. "It is not unusual for building societies to have a net withdrawal in January, as savers take money out of their accounts to pay for Christmas expenditure. Outflows have occurred in six Januaries out of the last ten.

"Adjusting for this normal seasonal factor there was a healthy net inflow of £722 million, once again illustrating the popularity of building society savings accounts."

Building Societies Association figures also show that gross mortgage lending by building societies totaled £1,570million in January, down from £2,395 in December last year, reflecting what is happening across the wider mortgage market.

Mr Coles commented: "With the depressed state of the housing market, it is no surprise that mortgage lending was so low in January. Indeed, repayments of existing loans exceeded new lending. Potential buyers may not enter the market while it appears that house prices are likely to continue to fall.

"Lenders may also be wary about granting loans in a declining market and in the current unsettled market conditions will have concerns about the long term availability of funding."

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