Building Societies Helping to Ease UK Housing Crisis by Boosting Mortgage Lending

A sharp increase in mortgage lending by building societies has been a driving force of the housing market recovery in the UK, according to KPMG.

The consultancy giant studied the 2014 annual reports of the 45 building societies in the UK.

It found they had lent £44.2bn in mortgages over the year, or 25.1% of the market. This is up sharply from 2013's £38.8bn, equating to 13.9% of the market.

House prices have risen sharply off the back of higher mortgage demand, itself fuelled by a healing economy, low interest rates and schemes such as Help to Buy.

The Office for National Statistics (ONS) said the average price of a UK house was £272,000 in July 2014 after leaping 11.7% over the year.

In response to higher house prices and a revival in mortgage demand, which tailed off after the financial crisis and caused the housing market to collapse, construction firms have upped their home building.

This construction revival has fed into the wider economic recovery in the UK, which is set to see growth of above 3% in 2014 – the fastest rate in the Western world.

"Building societies have an important role to play in easing the housing crisis, which our own research with Shelter shows is affecting all but society's wealthiest," said Richard Gabbertas, financial services partner at KPMG.

"The housing crisis has been caused by a complex bundle of factors but our report shows the building society sector is stepping up to support on the lending side."