Home loans competition hits Nationwide

NATIONWIDE warned of tough competition in the mortgage market, as it reported a slip in interim pre-tax profits.

The building society’s gross mortgage lending slipped 4.6pc to £16.7bn in the half year to September, despite the fact that it lent to a record 39,500 first-time buyers in the period.

Jo Garner, chief executive, said: “The mortgage market is extremely competitive, and that’s a great thing for consumers. We are well placed to compete because of our mutual status, but obviously that has an impact on margins.”

Mr Garner warned that the market “could get worse before [it] gets better”. He said: “There’s high employment on one hand, and squeezed incomes and Brexit uncertainties on the other.”

Pre-tax profits fell 9.6pc to £628m, although that was distorted by a oneoff gain from the sale of Nationwide’s Visa Europe stake for £100m last year. Stripping out that and a £26m gain from the sale of its Vocalink stake earlier this year, left profits higher than last year, Nationwide said.

Nationwide said it returned £245m in benefits to its members in the period, in the form of better-than-average interest rates, reduced fees and better incentives. It opened a record 427,000 current accounts in the period, up 13pc on the previous year, and said it attracted three times as many customers via the current account switching service than its nearest competitor.

Mr Garner said forthcoming “open banking” regulations would offer both opportunities and challenges.