During the period, the mutual lent £18.2bn, up on its pre-pandemic figure of £16.3bn in 2019. Compared to the six months to September last year, this was also an increase on the £12.7bn posted.
Over £5bn of mortgages lent during this period went to first-time buyers, which the mutual said was supported by its Helping Hand product and a return to 95 per cent loan to value (LTV) lending.
Some 29 per cent of new mortgages were issued to first-time buyers, up from 27 per cent last year. Meanwhile, home movers accounted for 34 per cent, up from 21 per cent in the six months to September 2020.
Despite the growth, Nationwide’s mortgage market share contracted to 11.4 per cent from 12 per cent annually. It said the market was larger and “highly competitive” due to pent-up demand and the stamp duty holiday.
Nationwide reported a rise in underlying profit to £850m against £305m last year, and statutory profit increased to £853m from £461m.
It attributed this to higher margins on mortgages and the release of £34m in credit provisions. However, it warned that its mortgage margins could be impacted by the competitive market going forward, also affecting profitability.
The mutual’s net interest margin improved to 1.24 per cent, compared to 1.15 per cent last year.
Chris Rhodes, chief financial officer at Nationwide Building Society, said: “During the pandemic, strong demand for mortgages, coupled with macro-economic uncertainty, led to higher margins on mortgage lending.
“This resulted in significantly higher income, and a very strong overall financial performance. Net interest margin improved, but is unlikely to be sustained at this level in future due to intense competition in the mortgage market.”
Nationwide said as long as recovery remained resilient higher interest rates would moderate house prices. It predicted that households would be able to “withstand an increase in interest rates” as a significant proportion of borrowers are on fixed rates.
The proportion of mortgages which were three months in arrears declined to 0.37 per cent from 0.43 per cent in April.
The mutual said the improvement was “expected to be temporary, with levels likely to have been suppressed by government support measures. An increase in arrears from current levels is expected over the medium term”.
It also decreased its impairment provision balances from £317m in April to £273m in September citing a better economic outlook.
Joe Garner, chief executive of Nationwide Building Society, said: “Our success is a testament to the strength of our mutual business model, to the hard work of our colleagues, and to the value we provide to our members. Given the level of uncertainty about the future, the strength of our finances gives us freedom to make choices, and confidence in continuing to support our members, colleagues and communities.”