Building societies are known for competitive rates but it seems the credit crunch has hit them hard with the number of mortgages being approved decreasing rapidly.

The Building Societies Association (BSA) has revelled gross lending fell to £3,631 million in March down by £5,439 million a year ago.

The BSA also found the number of agreed mortgages from building societies had dropped, in March £3,018 million worth of mortgages were approved compared to the £5,243 million in Marc 2007.

Financial experts have blamed the decrease in market to the number of mortgage deals withdrawn and the interest rate changes.

Adrian Coles director general of the BSA said “as other lenders withdrew from the market, some building societies found themselves offering best buy deals and were inundated with applications.

 They too were then forced to limit their lending, not because of funding difficulties, but in order to preserve the high levels of service that distinguish building societies from other providers.”