Nationwide Building Society has sounded a note of caution about the financial sector’s lending because of Brexit.
Joe Garner, its chief executive, did some research showing customers. The public had become less optimistic about the economy.
Banks After Brexit
Nationwide announced a fall in profits in the first three months of its financial year.
The society was one of the first to tighten its criteria for buy-to-let mortgages 18 months ago. It required landlords to prove that their rental income was at least 145% of their monthly mortgage payments, up from 125%. It also grants buy-to-let mortgages of up to 75% of the value of the property, down from 80%.
This, along with changes to tax, was cited as the reason for a fall in Nationwide’s mortgage lending in the three months to the end of June. New buy-to-let lending halved to £800m from the same period a year ago – which was cancelled out by buy-to-let mortgages being repaid, as the society said there had been “no net growth” in this range.
Across its entire mortgage range, lending – when repaid loans were also taken into account – was down to £2.4bn from £3.5bn.
The reduction in mortgage lending knocked profits for the period, which fell to £332m from £401m. Garner is aiming to run the society on the basis that it generates £1bn-£1.5bn a year.
About 202,000 current accounts were opened at Nationwide in the first three months, with more than one in five people switching accounts moving to the society.
A MoneySavingExpert.com survey published on Friday put Nationwide second for current account service. HSBC’s First Direct arm was top, while RBS was bottom. NatWest – a division of RBS – was eighth out of 11.
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Helen Tse is the author of Doing Business After Brexit published by Bloomsbury.
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