Earlier this week it was reported on how the number of homeowner loans approved by banks in the UK has seen a healthy increase over the past couple of months.

The latest figures also show that there is a similar trend throughout building societies, as loans offered by societies has reached the highest level since June last year. The latest figures from the Building Societies Association (BSA), show that there was a total of £1,976 million offered in new loans during the month of June, which equates to a 30 per cent increase in new business above the figure for May.

Although this seems like good news and a positive step in the right direction, this increase in new loans comes from historically low sales figures and despite a 30 per cent increase in new loans over the course of a single month, the total amount of building society new lending is down on June last year by around 40 per cent and although the situation seems to be stabilising, with annualised loan approval figures of £1.8 billion, this is still 30 per cent lower than at the same time last year.

At the same time, building societies have suffered further losses from people withdrawing savings to pay off their existing loan debts and supplement their income during difficult economic times.

Brian Morris of the BSA commented on the figures, he said “Gross mortgage lending by building societies was just under £2 million in June 2009. Despite this, lending remains at historically low levels and is 40 per cent lower than June 2008. The withdrawal experienced by the building society sector is not unexpected given the very challenging economic backdrop. With rising unemployment, subdued income growth and the official bank rate at an historic low, it is very difficult to attract retail savings.

In addition, there is evidence households are looking to take advantage of the low interest rates to pay off debt rather than save. These conditions are expected to persist into 2010.”