Nationwide profits hit by buy-to-let slump

Nationwide Building Society has reported a fall in profits following a slowdown in the buy-to-let market.

The UK’s biggest mortgage lender said that pre-tax profit was £322 million in the three months to the end of June, down from £401 million in the same period last year.

Net mortgage lending was £2.4 billion in the quarter, down from £3.5 billion last year.

The group said this fall was mainly a result of a slowdown in the buy-to-let market following changes to underwriting criteria. The buy-to-let market has also been hit by the 3% increase in stamp duty on second homes and changes to mortgage tax relief.

Gross mortgage lending was £8.1 billion, down from £8.6 billion a year ago. This gave the lender a total market share of 13.0%.

Nationwide chief executive Joe Garner said consumer confidence remained an important barometer for the lender. He added that while consumers were worried about the long-term economic outlook, they did not expect leaving the EU to affect their access to borrowing.

“Although the UK public has become less optimistic about the outlook for the economy generally, research conducted for our Brexit Consumer Support Panel shows that the majority of consumers expect Brexit to leave their ability to access credit unchanged,” he said.

“It will be important for lenders to balance carefully credit supply with affordability as we seek to support the long-term interests of consumers in a responsible way through any potential economic slowdown ahead. In a period of potentially prolonged economic uncertainty and persistently low interest rates Nationwide continues to invest in products and services to support the long-term needs of our members.”

His comments come after the Bank of England’s recent warning that a sharp rise in consumer debt could pose a threat to the UK economy.

In July, Bank told Britain’s lenders that they must set aside £11.4 billion of capital in the next 18 months to make them more resilient to the risk of rising consumer debt.

The building society said that 202,000 current accounts were opened, up 17% on the same period last year.