Building societies 'not struggling'

Building societies are not struggling despite the uncertain financial conditions, according to the Building Societies Association (BSA).

The organisation has urged customers not to panic despite reports last week that some building societies were restricting lending for new mortgages.

Neil Johnson, PR and policy manager for the BSA, said "As [larger] lenders had pulled out of the market, they found they had been inundated with applicants and had to take some action to maintain the service levels that their customers expect."

He added that unlike a lot of their PLC competitors, building societies are "very successful" at getting funding which puts them in a good position to continue lending.

The trade association has also said that the problem in the wholesale markets have not affected building societies in the same way that banks have been hit as they are funded mainly by retail deposits.

Building societies are only allowed to draw 50 per cent of their funds from the wholesale market.

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