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January 21, 2008

Bulding society receipts exceed £16bn

by Gill Montia

Story link: Bulding society receipts exceed £16bn

Building societies will remember 2007 as a bumper year, with a record £16.1 billion of savings deposited in accounts.

The figure is almost double that of 2006 and reflects the impact of the Northern Rock crisis in the autumn.

In October of last year, building societies recorded net receipts of £3 billion, up from a record £2.8 billion in September and almost four times the £772 million pound deposited in October 2006.

According to the Building Societies Association, the previous record year for savings was 1988, when £13.6 billion was invested.

At this point savers were seeking a safe haven for their money following the stock market crash of October 1987.

Adrian Coles, the Association’s director general, states: “A significant proportion is almost certainly funds withdrawn from Northern Rock. However, a substantial amount is also likely to be from households increasing the amount they save in preparation for a more uncertain year ahead. With competitive interest rates on offer and uncertain times in the equity markets, building societies continue to be an attractive home for people’s savings.”

However, last year gross lending by building societies was almost flat year on year, at £52.1 billion and net lending was down by 20.7%, to £12.6 billion, “largely because of higher interest rates in the mortgage market as a whole”.

 

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