Cash ISAs contribute to record building society figures

03 June 2008 / by Joy Tibbs
In spite of tight lending conditions since the credit crisis struck the UK, savings levels have risen. The Building Societies Association (BSA) recorded a record monthly inflow to building society cash ISA accounts in April.

Inflows into the UK's 59 building societies for the month totalled £1.8 billion compared with £1.4 billion in April 2007. Cash ISAs were the biggest contributor, with net receipts to cash ISAs totalling £2.1 billion compared with £1.8 billion for the same month last year.

Director general of the BSA, Adrian Coles, said: "Yet again, building societies have attracted record savings inflows during April, continuing their excellent performance in the savings market.

Savers are increasingly recognising that the very competitive saving products that building societies offer represent excellent homes for their cash in these uncertain economic times. It appears that building society cash ISAs were particularly popular because of a less optimistic outlook for future stock market performance."

Meanwhile, building society lending fell to £3.6 billion in April compared with £3.8 billion last April. "Gross lending was down just 3.3 per cent on the same month last year, and was similar to the level seen in March this year," said Mr Coles. "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 depressed mortgage market, building societies remain open for business (every society issued new mortgages during April) and are able to lend."

© Fair Investment Company Ltd