New savings deposits at building societies rose by almost two-thirds in the first half of 2008 as risk-averse consumers took advantage of high savings rates, the Building Societies Association (BSA) said.
Building societies had total savings inflows over the first six months of 6.3 billion pounds, up 63 percent from 3.86 billion pounds in the same period last year, according to BSA data.
Lenders have raised their savings rates in an effort to attract new deposits to reduce their dependence on wholesale funding, which has dried up during the credit crunch.
Banks including HBOS and Lloyds TSB have reported they are also attracting more savings as customers adopt a more prudent attitude in the face of a worsening economic climate.
"With an uncertain economic outlook and stock market turbulence, savers are wisely viewing building societies as excellent homes for their money," BSA Director General Adrian Coles said in a statement.
The BSA also reported a 60 percent slump in lending as its members responded to the credit crunch by reducing the supply of mortgage finance. Net lending for the first half of 2008 was 3.45 billion pounds, compared with 8.43 billion pounds in the same period last year.
Over the past year, mortgage lenders have raised borrowing costs and demanded higher deposits in an effort to conserve capital and protect profits. The abrupt drying-up of mortgage finance has triggered a drop in UK house prices, ending a 10-year property boom.
"Many societies have chosen to follow a conservative lending policy to ensure that they maintain the high quality of their loan books," the BSA's Adrian Coles said.
