Households are looking to repay debt rather than save, according to the latest savings and mortgage figures from the Building Societies Association (BSA).
Gross mortgage lending by building societies amounted to £1,515 million in May, a level similar to that reported in the previous two months, but still 57% lower than a year earlier.
However, at the same time, there was a net withdrawal of £494 million from building society savings accounts, compared with net deposits of £855 million 12 months previously.
"While the mortgage market appears to have recovered slightly from the start of the year, levels of activity remain depressed," said Adrian Coles, director general of the BSA.
"There is evidence that households are looking to repay debt rather than save, and it is possible that there will be a net withdrawal from the total UK savings market in 2009.
"Overall, building societies offer attractive savings accounts that are trusted by savers. As a result, societies have attracted substantial inflows since the financial crisis began."
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