Boom for building societies in 2007
January 30, 2008
A recent report has shown how building societies across the UK enjoyed record deposits last year, with the level of money pumped into building societies fuelled by the crisis that hit Northern Rock, which saw many savers withdraw over £2 billion in savings from the bank amidst fears that it was on the verge of collapse. The report suggests that consumers have lost faith in share-holder owner banks after what happened to Northern Rock, which became the victim of the first run on a British bank in more than a century.
Figures suggest that £16.1 billion in savings was placed into building societies last year. Building societies are owned by members, and the billions of pounds that was placed into building societies last year has easily beaten the previous record of £13.6 billion from 1988. However, the slowdown of the housing market resulted in the amount of money that was lent to consumers by way of mortgages falling by 21%.
Much of the money that was pumped into building societies last year was placed into the accounts in the latter half of the year, and this further suggests that the Northern Rock situation helped building societies to enjoy this enormous success. The popularity of building societies also seems to be growing with a recent poll showing that a building society, Nationwide, beat all the major banks in getting to the number one spot as the most trusted bank or building society.
The report also showed that in 2007 building societies managed to raise just over £19 billion in the wholesale markets, and this compared to just £13.5 billion in 2006.
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