Building societies and new banks take 22% of FLS

This is despite being responsible for just 22% of withdrawals, analysis from housing investment and shared equity mortgage provider Castle Trust shows.

Cumulative net lending from the 25 building societies in the scheme was £5.3 billion while the five new banks contributed £2.4 billion, Castle Trust’s analysis shows. However Bank of England figures show their total withdrawals under the scheme were just £3.1 billion compared to £10.8 billion from established banks which have actually reduced net lending by £9.24 billion.

Building societies that have substantially increased net lending include Buckinghamshire Building Society which recorded a 15.7% rise in loans while Coventry Building Society increased loans by 4.7% relative to its base stock.

New banks also recorded substantial rises with Metro Bank more than doubling lending with a 118.8% rise while Virgin Money saw a 7.2% increase and Tesco Bank an 11.8% increase. Aldermore saw its loans rise by 30.6% and Shawbrook by 37.7%. By contrast the only established bank which saw a rise in net lending relative to its base was Barclays with a 3% increase.

Castle Trust, which enables lenders to increase lending while also preserving capital through its shared equity Partnership Mortgage, believes the success of FLS is heavily dependent on building societies and new banks as well as a commitment to further innovation in the market.

Sean Oldfield, chief executive officer, Castle Trust said:

“Most of the established banks have corporate restructuring issues to deal with and the FLS figures do not necessarily tell the whole story about their mortgage lending.

“However, it is also clear that building societies and new challenger banks are delivering on the promise of Funding for Lending with substantial rises in net lending and competitive products.

“Further innovation is crucial to help them and the established banks to build momentum in the mortgage market and maintain the recovery that is emerging.”