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UK mortgage lending to rise at pedestrian pace

Staff Writer |
Nationwide Building Society reported a drop in annual profit and said that mortgage lending is likely to rise at a "pedestrian pace" due to subdued housing market demand in the UK.

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For the financial year ended April 4, the building society, one of the UK's largest, recorded profit of GBP977 million, down from GBP1.05 billion in the year ago period, on a net interest income of GBP3.01 billion and GBP2.96 billion respectively.

The drop in profit was attributed to GBP116 million debt buy?back costs and absence of a GBP100 million disposal gain recorded in 2017 financial year. Adjusted profit for the year totalled GBP1.02 billion versus GBP1.03 billion previously.

Net mortgage net lending for the year fell to GBP5.8 billion from GBP8.8 billion.

"Net lending was down on the previous year, in line with our decision to reduce our buy to let lending through The Mortgage Works, along with increased prime mortgage redemptions, as we managed margins in the long-term interests of the society in a fiercely competitive market," the company said.

Nationwide's Common Equity Tier 1 ratio stood at 30.5% versus 25.4%.

"Turning to the outlook for our own business, we anticipate modest growth in our core product markets, reflecting the outlook for the economy as a whole.

"With employment growth expected to slow and pressure on household budgets fading only gradually, mortgage lending is likely to rise at a fairly pedestrian pace.

"While demand in the housing market looks set to remain subdued, lack of supply will provide support for prices.

"We expect the mortgage market to remain extremely competitive," chief executive Joe Garner said.

The lender said it expects UK house price growth to slow to 1% over the next year.


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