Finance Matters

Posts Tagged ‘Nationwide Building Society’

Despite the slump in the housing market, Nationwide Building Society’s gross mortgage lending increased by 48% to £8.9 billion in the six months to September.

Although the number of first-time buyers in the market continued to fall, Nationwide lent more than £1.2 billion to this group in the first half of the year, 3 per cent more than it did in the previous year.

Over the same period, Nationwide’s subsidiary The Mortgage Works doubled its gross mortgage lending to £2.6 billion.

Graham Beale, Nationwide’s chief executive, said: “It is particularly pleasing to see a 48% increase in our gross mortgage lending, which demonstrates our commitment to supporting growth in the economy as well as meeting the needs of our borrowers”.

Nationwide also reported a 17 per cent rise in underlying pre-tax profits to £172 million in the six months to the end of September, compared with the same period in the previous year.

Although low interest rates are making life difficult for savers, the building society saw a 250 per cent increase in the rate of cash deposited in its savings accounts to £1.4 billion, making it the second largest savings provider in the UK.

Despite the positive results, Nationwide expects conditions to remain difficult until the eurozone crisis is resolved and the UK economy stabilises.

Nationwide has confirmed that it will participate in the Government’s newly announced New Build Indemnity Scheme.

The scheme, which is designed to boost the housing market, will help prospective buyers who are unable to raise the large deposits currently needed to secure a mortgage.

It will allow first time buyers to secure loans on newly built homes with only a 5% deposit, with security for the loan being provided by the Government and housebuilders.

Nationwide already offers a 95% mortgage with a rate of 6.14% through its Save to Buy scheme, and it has not yet been decided if the New Build Indemnity Scheme will make it possible for the building society to cut rates.

New figures from the Halifax show a 1.2 per cent increase in house prices in October, however compared with a year ago they have fallen by 1.8 per cent.

In the three months to the end of October, house prices fell by 0.3 per cent, compared with the previous quarter, representing the first fall since June, according to the Halifax’s own mortgage data.

However, the Halifax said that despite the difficult economic climate the housing market had remained “highly resilient”.

It also said that it expected the exceptionally low official interest rates to continue to support the housing market.

The Halifax’s findings broadly support Nationwide Building Society’s recent figures showing a year-on-year rise of 0.8 per cent in October.

Over the country as a whole, there is concern that the north/south disparity in house prices is increasing as a result of the Olympics.

Recent Land Registry figures indicate significant differences in price changes in different parts of the UK.

While house prices in London increased by 0.3 per cent in September compare with the previous month, they fell by 3.9 per cent in the North East of England.

On an annual basis the disparity is even more pronounced, with London prices increasing by 2.7 per cent while prices in the North East of England fell by 8.2 per cent.

Rightmove has also reported an increase in the north south divide, with an average asking price of £336,743 in the south of England, compared with £164,347 in the north, a difference of £170,000.

The disparity is particularly noticeable for properties near the Olympic venues, which are commanding premium prices.

Rightmove based its figures on 98,402 asking prices for houses placed on sale by agents between 11 September and 8 October and advertised on Rightmove.co.uk.

The difference between prices in the north and south of England is now the widest ever recorded by Rightmove.

Halifax has improved its ISA offering with a better return on its five year fixed rate product.

The ISA now pays 4.4 per cent, strengthening its position as the market leading long term fixed rate ISA.

The product is an excellent option for savers who do not mind their savings being tied up for the five-year period.

However, savers wishing to make an early withdrawal will have to close the account and will lose 365 days’ interest.

A significant advantage of the new product is that transfers in from existing ISAs are accepted.

On Friday, Nationwide building society also launched a new ISA.

The building society announced a new one-year fixed term ISA offering between 3 per cent interest on balances between £1 and £9,999, 3.2 per cent on balances between £25,000 and £49,999, and 3.25 per cent on balances above this amount.

The new ISA replaces Nationwide’s 14-month Fixed Rate ISA which has now been withdrawn.

ISAs have been a great success since they were launched in 1999.

They are now second only to current accounts in terms of popularity, and it is estimated that 40% of UK households have one, with the average ISA balance being £8,505.

The annual limit for investment into an ISA is being increased to £11,280 from April next year, and up to half of this amount can be saved in a cash ISA.

The limit is being raised because of the high inflation figures recorded in September.

This month saw the launch of Junior ISAs, with an annual investment limit of £3,600 for each eligible child.

Children born on or after 3rd January 2011 and children under 18 years of age, born before September 2002, are eligible to take out the Junior ISAs.

As part of its ‘On Your Side’ campaign Nationwide Building Society has launched a credit card reward scheme which should make shopping more enjoyable for its customers.

The scheme, which is available to the building society’s Visa debit and credit card customers, is designed to help their money go further.

It offers discounts at several leading retailers, with the launch offer including a 15 per cent discount at card and gift retailer Clintons on purchases to the value of £10 or more, and a 20 per cent discount at Hertz on selected destinations worldwide.

Discounts of up to 50 per cent are available, including on certain West End Theatre tickets.

Nationwide’s banking director Graham Pilkington said the scheme “rewards our loyal customers and is further proof of us being ‘On Your Side”.

Nationwide customers with a Visa debit or credit card can register for the scheme on the Simply Rewards website.

A number of credit card companies are currently offering cash-back rewards designed to help customers make their money go further over the expensive Christmas period.

Recent research by Defaqto looked at 13 credit cards currently offering cash-back rewards and found that the highest rate was offered by Capital One’s World MasterCard.

This offers an introductory 5 per cent cash-back on purchases for the first 99 days, with a maximum of £100 cash back on total expenditure of £2,000.

After the introductory period it provides 0.5 per cent cash-back on aggregate annual purchases of up to £6,000 and 1 per cent on purchases between £6,000 and £10,000.

Some cards offer rewards other than cash back, including air miles, points, and shopping rewards.

The latest house price index from the Nationwide Building Society has revealed prices rose by 0.4% in October on a monthly basis.

On an annual basis, house prices are now 0.8% higher than this time last year – representing the first yearly rise in six months – with the average UK home costing £165,650.

However, when comparing prices in the three months to the end of October with the previous quarter (which is a more reliable indicator), prices fell by 0.2%.

According to the Nationwide, today’s figures suggest the housing market is still “treading water”.

Nationwide’s chief economist, Robert Gardner, comments: “The outlook remains uncertain, but with the UK economic recovery expected to remain sluggish, house price growth is likely to remain soft in the period ahead, with prices moving sideways or drifting modestly lower over the next 12 months.”

In other housing market news this week, property website Hometrack said weak demand drove house prices down 0.2% last month and warned of a downward trend in house prices in the coming months.

Also this week, the Bank of England revealed mortgage approvals fell in September for the first time in six months.

According to the Bank, there were 50,967 loans approved in the month – down 3% on August’s figure.

However, September’s figure was broadly in line with forecasts and suggests the UK mortgage market will remain subdued for some time to come.

Approvals still remain well below levels seen prior to the financial crisis.

Since the early 1990s, mortgage approvals have averaged around 90,000 a month but the credit crunch saw a tightening of lending criteria and many have been unable to secure a mortgage unless they have a significant deposit.

Meanwhile, HM Revenue & Customs (HMRC) revealed a fall in the number of homes sold in September in the UK.

According to HMRC, 72,000 homes worth at least £40,000 or more were sold in the month – the second consecutive monthly decline and way below the July peak of 83,000.

At the height of the housing boom in July 2007, 151,000 homes were sold.