Nationwide Building Society has reported its highest mortgage lending since before the financial crisis, but warned increased competition could hit future profits.
The UK’s second largest lender said gross mortgage lending had risen 20% to £32.6 billion in the past year. This is highest level of lending seen since before the financial crisis and gives Nationwide a 13.7% market share. Net mortgage lending rose 28% to £9.1 billion.
Nationwide posted a rise in underlying profit of 9% from the previous year to £1.3 billion. However, it warned that profits will come under pressure in the future as competition in the mortgage market heats up.
It said there was “clear evidence of more sustained competition within the mortgage market” which would result in further margin pressure during the coming year.
The building society’s new chief executive, Joe Garner, said: “Nationwide has demonstrated that outstanding customer service is the most sustainable path to excellent business performance. It’s a credit to the management and people of the Society that they have consistently understood this and organised Nationwide around this principle.
“As a result, last year we lent more money to help people into a home of their own than since before the financial crisis in 2007. More people are also choosing to manage their money with Nationwide, with over half a million new current accounts opened in the year.”
The Society has helped 57,200 first-time buyers into a home of their own and also recently increased the maximum limit for mortgages from 75 to 85.
Nationwide said that uncertainty surrounding the EU referendum and the global economic outlook are likely to have some impact on UK economic activity in the near term.
Once the uncertainty lifts and the global economy gradually strengthens it expects UK economic growth will move back towards its long term trend rate of 2% to 2.5% per annum.
Garner said: “We expect the housing market to remain resilient, with any dampening of activity from modest increases in interest rates offset by a strengthening labour market and an under-supply of housing.”
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