Buy-to-let lending through The Mortgage Works (TMW) fell from 22% to 14% of all loans in the last 12 months after the lender tightened its interest coverage ratio (ICR) from 125 to 145%. At the same time it dropped its maximum loan to value from 80 to 75% in line with the market’s response to the regulator but introduced a 125% ICR for basic rate taxpayers in May.
The lender opened record numbers of current accounts with one in five account switchers moving to the mutual. The lender said this supported record mortgage lending, which rose 3% to £33.7bn.
Nationwide remains the UK’s second biggest mortgage lender after Lloyds reported £38bn of loans to February 2017 sealing its position as biggest lender.
In its annual results to 4 April 2017, the building society also reported a 17% fall in statutory pre-tax profits to £1.054bn, which its CEO Joe Garner said was a “conscious choice” to support customers in a low-interest rate environment.
The building society grew its membership to 15m, with 2.2m mortgage borrowers offering a UK mortgage market share of 12.9%. Total lending included 75,000 first-time buyers, or one in five in the UK, up from 52,000 last year.
Mortgage balances grew by £9.1bn of which £8bn was prime lending and £1.1bn related to specialist lending, down from £3.9bn in 2016.
Residential mortgage arrears are flat at 0.45% but impairment provisions rose to £144m from £102m in 2016. The mutual changed its provisioning methodology to reflect maturing interest-only loans and current non-performing balances which saw the 5.3% rise.
Nationwide chief executive, Joe Garner, said: “Record growth in mortgages and current accounts helped us deliver profits of over £1bn for the third year running.
“As a member-owned organisation, we don’t seek to maximise our profits but to manage them in our members’ interests. We make conscious choices about how we distribute our profitability between strategic investment, capital generation and member financial benefit. Our success this year allowed us to improve our capital strength and continue to invest in growing the society.”
The mutual saw greater use of its mobile app and invested £80m in its branch network.