Britain’s biggest building society saw its underlying pre-tax profits increase to £980 million in the half-year to September 30, up from £850m the previous year. Higher interest rates - which have particularly affected the mortgage market in recent months - pushed up the lender’s total income by £296m over the period.
Nationwide, which ranks as the second-biggest mortgage lender in the UK after Bank of Scotland-owner Lloyds Banking Group, said it was ramping up its credit impairment charges in anticipation of future increases in arrears as the economy worsens and people face affordability pressures. However, the society, which rescued the Dunfermline Building Society during the financial crisis, stressed that it has not yet seen a significant increase in customers missing payments because many of its borrowers are shielded from the effects of rising rates.
Chief economist Robert Gardner said: “If you look at household net wealth, that’s still at really elevated levels. A lot of extra savings were accrued during the pandemic lockdowns - households accrued an extra £200 billion over and above what you would expect them to build over that period. That amounts to £6,500 extra per household, additional to what you would expect. So that’s helping to give them a buffer.”
He added: “Affordability tests have become central to mortgage lending, which makes sure that households are able to withstand shocks to expenditure, whether that’s bigger energy bills or increased interest rates.”