Building societies take in record £3bn savings

Higher interest rates helped the UK's building societies take in more than £3 billion of deposits in October, as Northern Rock savers looked for a new haven for their cash.

New data from the Building Societies Association (BSA) reveal net receipts in October stood at £3,024 million, compared with £772 million last year.

Receipts into cash ISAs rose £26 million to £91 million, when compared with a year ago.

In total £15,377 million was placed in building society accounts and £12,353 million was withdrawn.

Adrian Coles, BSA director-general, said "It seems the majority of these deposits are funds withdrawn from the Northern Rock bank, with the attractive savings products offered by building societies continuing to appeal to customers looking for the best home for their money."

"At £3,024m October's net receipts for building societies were the highest monthly figures ever, beating the record of £2,821m set last month, and almost four times the £772m deposited in October 2006."

However, mortgage lending at building societies fell - as the higher interest rates attracting savers turned off borrowers, compounding a fall in demand as the housing market slows.

Net mortgage advances were at £1,124 million last month, compared with £1,661million last year. Loan approvals - a good guide to the future housing market - fell £662 million to £3,658 million.

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