MortgagesNov 20 2015

Nationwide hits back at being lumped in with banks

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Nationwide hits back at being lumped in with banks

Nationwide Building Society has expressed disappointment that the chancellor included it in the introduction of the tax surcharge on banks announced in the Budget.

In the mutual’s interim results to the end of September, chief executive Graham Beale stated as Nationwide is not a bank - and serves a social purpose of facilitating home ownership and promoting a savings culture - “the tax surcharge will have a disproportionate effect on building societies and we believe that it represents a missed opportunity to support diversity in UK financial services.”

In September, the society was bullish about the estimated £300m bill from the government’s bank profits tax, stating it would not impact its ability to lend.

Elsewhere in the financial update, Nationwide recorded half year gross mortgage lending was up 14 per cent at £14.9bn, which boosted the society’s statutory profit before tax by 34 per cent to £802m and underlying profits for the six months was up 27 per cent to £801m.

Net lending was also up 14 per cent at £4.1bn - compared with £3.6bn for 2014 to 2015 - representing a market shares of 21.2 per cent - down slightly from 24.8 per cent during the first half last year.

The building society helped 25,700 people to take their first step onto the property ladder, an increase of 8 per cent on the same period last year, helped by the recent launch of a range of mortgages that require a deposit of only 5 per cent.

In addition to lending to owner occupiers, Nationwide’s subsidiary The Mortgage Works helped drive the buy-to-let market, with gross advances accounting for £2.9bn of the society’s total mortgage lending, up 32 per cent and representing a 14.9 per cent share of gross buy-to-let lending in the UK.

As for the outlook, Mr Beale explained that after trending down through 2014, housing market activity has increased modestly over the course of 2015.

“Mortgage approvals have broadly tracked this trend, while remortgage approvals have risen more strongly, encouraged by the prospect of the potential for interest rates to increase.

“Whilst shifts in interest rate expectations may have some impact on the housing market, a strengthening labour market underpinning a continued economic recovery should support both activity and house prices, with the latter also receiving support from the chronic under-supply of houses for sale.”

In recent months the annual growth of house prices in the UK has remained in a fairly narrow range between 3 and 4 per cent.

However, prices in London have continued to rise more rapidly, and in the third quarter this year they were over 10 per cent higher than at the same point last year.