Nationwide bucks trend of slow mortgage lending with 44% rise in home loans

Published 23rd May 2012

Nationwide increased its mortgage lending 44 per cent to £18.4billion in the past year, outpacing the market which grew by just 5 per cent.

The jump in home loans was partly spurred by first-time buyers - more than 24,000 took out a mortgage with Nationwide in the year to April 4, compared to 22,200 the previous year.

The building society maintained its Base Mortgage Rate pledge, which has seen many of its borrowers revert to a rate capped at 2 per cent above the Bank of England's 0.5 per cent base rate.

It estimated the cost of the pledge has been in the region of £750million over the past year, equating to an average of £1,000 for each account per year.

Nationwide revealed a 10 per cent rise in underlying profits to £304million on a 10 per cent rise in underlying income to £2.1billion in the past year.

Meanwhile, the building society said it was planning to start making loans to small businesses - potentially making it an alternative player to the big five banks which have been accused of starving firms of credit.

Nationwide, which has previously only hinted at providing financial services to small and medium-sized enterprises (SMEs), said it wanted to play an increasing role in providing credit to an 'important part of the UK economy'.

The announcement comes at a time of heavy pressure on Britain's biggest banks to provide more credit to struggling businesses, but corporate customers should not expect Nationwide loans to be available until late next year.

Nationwide chief executive Graham Beale said: 'We're already a lender to the commercial real estate sector, we've been asked by customers to provide them with a corporate lending facility. We just feel it's a natural extension of what we can do.

He added: 'We're quite confident there's sufficient demand.'

The Project Merlin agreement last year was drawn up between the Government and banks in a move designed to boost lending to SMEs.

Lloyds Banking Group, Royal Bank of Scotland, Santander UK, Barclays and HSBC agreed with the Government to increase lending available to SMEs to £76billion and boost lending available to all businesses to £190billion.

The final figures confirmed that the five banks missed gross lending targets for small businesses last year by more than £1billion but beat the target for all businesses by £24.9billion.

Nationwide is the second largest savings provider in the UK, with net savings receipts for the year to April 4 up 67 per cent at £1billion, while new sales of debit cards, credit cards and personal loans were up 13 per cent at 828,000.

The group said it had increased the charge set aside to cover the cost of payment protection insurance mis-selling claims by £103million, on top of £16million set aside in the previous year.

Its bad debt charges were broadly flat at £428million, with a rise in commercial lending provisions being largely offset by an improvement in retail lending charges.

The building society said it had no direct sovereign exposure to struggling eurozone countries Portugal, Ireland, Italy, Greece and Spain.

Source: ' ThisIsMoney '

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