Banks now dominating the mortgage market as building societies lose share

Banks are dominating the mortgage market, findings by Datamonitor reveal. Outstanding mortgage balances grew by £145.6bn for banks while building societies saw balances shrink by more than £18bn.

Datamonitor’s study of Competitive Dynamics in the UK Mortgage Market 2010 shows that the top six banks increased their share of gross lending to 85 per cent. The figures represent signs of positive growth in the mortgage market but indicate a shift in how difficult it has become for building societies to compete.

Daoud Fakhri, analyst at Datamonitor, sees the findings as a consequence of the government bailout at the peak of the financial crisis.

He said: “Banks have been able to borrow from the state at advantageous rates which building societies haven’t had access to.”

He added: “Most people would have expected building societies to emerge from the credit crisis in a stronger position than banks. It seems that although they didn’t engage in high-risk lending which contributed to the banking crisis they have still suffered.”