Societies see net outflow in July

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The Independent Online
Building societies suffered a net loss of funds for the second month running in July, according to figures released by the Building Societies Association yesterday.

Savers withdrew pounds 325m net - pounds 11m up on the previous month's losses. But the outflow was not as great as some had predicted.

July is usually a weak month for building societies, with funds withdrawn to pay for summer holidays. In July last year there was a net gain of pounds 286m. For the first seven months of 1992, building societies have seen a net gain of just pounds 18m.

National Savings was blamed for the stampede out of building society accounts as savers switched into the newly launched First Option Bond and other competitive National Savings products. The rate on the bond was cut on 20 July, and other National Savings offerings were withdrawn on 5 August and then relaunched at lower rates on Monday.

August is expected to be another poor month for savings with holiday spending and new car registrations responsible for withdrawals. September's figures will be affected by the final payment for electricity shares. So it will be October before any improvement is expected in the savings figures.

Mortgage lending in July was the highest for the year at pounds 3.74bn as home buyers rushed to beat the stamp duty deadline. But the total was still below July last year.

The figures for new commitments for July, which show building societies' promises of mortgages and provide a forward indicator of the market by roughly six weeks, show a 7 per cent rise to pounds 3.45bn.

Bradford & Bingley Building Society reported a drop in profits for the half year to 30 June, from pounds 36m to pounds 27m. Loss provision rose from pounds 6.9m to pounds 25.7m while management expenses rose from pounds 54.3m to pounds 71.6m, reflecting the takeover of Leamington Spa Building Society.