Building society deposits rocket
November 26, 2007
The amount of money that savers are depositing in building societies has rocketed following the recent Northern Rock crisis.
Septembers saw the level of deposits made to building societies from savers go sky high as savers that had closed their accounts with Northern Rock – withdrawing over £2 billion in total – sought an alternative account in which to place their savings. Net receipts for building societies leapt by 181% in September, rising to £2.8 billion.
The amount deposited in building societies was around three times the amount deposited in building societies last September, and was around double the amount deposited this August. These figures have hit record highs, with the amount deposited into building societies exceeding the former record by over £1 billion. The previous high was in 1986 after customers flocked to deposit their savings following failure to purchase TSB shares.
Customers have rushed to building societies to open savings accounts and ISAs after withdrawing their cash from Northern Rock after it was found that the bank had taken a loan from the Bank of England, fuelling fears that it was on the verge of collapse. A recent survey has shown that consumers in the UK have lost confidence in banking and many have expressed that they have more faith in building societies than in banks.
According to the Building Societies Association building societies have always been more careful with their lending than banks, and have only allowed those customers that could afford it to borrow money. A spokesman stated: ‘Building societies have always undertaken less fiscal lending but over the past year, as economic conditions have worsened, they have tightened their lending practices.’
Alan Wright
26th November 2007
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