The Nationwide, Britain’s biggest building society, has seen its half-yearly pre-tax profits fall by 18% to £322m, down from £394m for September last year.
Nationwide admitted it had been hit by a “challenging economic environment” which saw bad debts rise £12m from last year, as mortgage borrowers continue to struggle with mortgage repayments during the global recession. Mortgage Insurance protection can be found at Personal Accident
The lender’s book of bad debts now stand at £74m.
The 2007 acquisition of the Portman Building Society and it’s subsequent incorporation, is a major factor in the fall in profits.
Its net share of the lending mortgage market has fallen 0.6% down to 5.6%, however the number in arrears stands at only 0.4%, compared to an industry average of 1.33%. These figures reflect the uncompetitive mortgages offered and the shrewd approach to the buy to let market in the past few years.
Nationwide remains confident that recent interest rate cuts will help minimise payment issues and reduce the impact to customers reaching the end of current deals.
It also suggested that the fall in house prices would “improve affordability, which should bring about a recovery in the first time buyers’ market”.
Nationwide was one of the few lenders that immediately agreed to pass on the Bank of England’s 1.5% interest rate cut to mortgage holders last week.