UK building society reports 92% rise in mortgage lending

Nationwide, the UK's largest building society, has posted a 92.7% rise in net annual mortgage lending to £10.6bn (€15.5bn), but said the recent spate of interest rises had started to bite.

Nationwide, which is merging with Portman in what marks the biggest building society tie-up, said the four rate rises since last August were impacting on the housing market and would see a "cooling" in the second half of the year.

The mortgage lending giant remained upbeat on the prospects for the housing market, however, forecasting price growth of 5% to 8% this year.

Nationwide reported 17% growth in pre-tax profits to £652m (€954.3m) for the year to April 4, boosted by the continued strength in lending, alongside good performance in its current account and credit card offerings.

The firm revealed a 40% rise in unsecured lending arrears across personal loans and credit cards last year as the group saw more borrowers struggle with repayments.

Nationwide said that while its arrears levels had increased, the bad debt figures were 30% better than the industry average for credit cards and 25% better for loans. The group added that it was now turning down three in every five unsecured borrowers in an attempt to cut bad debts.

Nationwide chief executive Graham Beale said: "We are being much more careful about the business we're bringing on to the balance sheet."

Non-standard mortgage lending, which targets sub-prime borrowers, such as those with poor credit records, meanwhile saw a 9% decline in the number of borrowers in arrears for three months or more within Nationwide's niche lending arm UCB.

Total net residential lending, including prime and sub-prime, increased by 77.8% for the year to £11.2bn (€16.4bn), giving the group a 10.1% share of the market, securing its place as Britain's fourth biggest mortgage lender.

The merger with Portman will propel the society to second place behind HBOS when it goes through at the end of August.

The enlarged group will have combined assets of more than £160bn (€233.86bn), but jobs are set to go as a result of the deal, with up to 900 redundancies expected over two years.