Building societies are still looking healthy according to officials

According to some industry officials buildings societies are managing to avoid the brunt of the global credit crunch, even though the nation’s major banks are suffering as a result of the credit squeeze. Officials from the Building Societies Association recently claimed that building societies are not suffering in the same way as banks and other larger lenders.

One official from the BSA said: “I don’t think they’re struggling, in fact very much the opposite. Building societies aren’t the only organisations out there that are cutting back on lending, competitors are as well. Just because they’re restricting lending doesn’t mean that they’re struggling.”

The comments came after a number of building societies reported that they would have to restrict lending and withdraw certain mortgage deals from the shelves. Whilst some thought that this was due to problems in securing finance, industry officials say that it is actually because of hugely increased demand from consumers that are being turned down by struggling banks.

Officials added that in most cases building societies funded their mortgage lending through savers’ deposits, and therefore were not experiencing the same problems with securing finance as banks, which have fund it increasingly difficult and expensive to secure funding on the money markets to fund mortgage lending.