Nationwide ‘open-minded’ on low-deposit mortgages, says boss

Nationwide is “open-minded” about offering lower deposit mortgages that could help first-time buyers who are struggling to secure a loan during the coronavirus crisis, its chief executive has said.

The building society, which is the UK’s second largest mortgage provider behind Lloyds Banking Group, is one of the few high street lenders offering loans worth up to 90% of a property’s value.

While rivals such as HSBC have “temporarily reserved” people’s mortgages worth more than 85% of the value of a home to customers switching interest rates in order to curb surging demand, Nationwide’s chief executive, Joe Garner, said he was not ruling out offering low-deposit loans over the coming months.

“We’re open-minded,” he said, adding that the UK housing market had “proved very resilient” since it was reopened after a near seven-week freeze during the spring lockdown.

The housing market has since boomed as a result of a stamp duty holiday on properties worth up to £500,000 and what has been described as the “race for space”, as people look for larger or rural homes to accommodate remote working and more time spent at home owing to the pandemic.

“We’ve been one of the most consistent lenders in the 90% segment through this period. And that’s great for our members, and you can see, also supporting our financial position,” Garner said.

His comments came as Nationwide reported a 17% rise in pre-tax profit to £361m in the six months to September, compared with £309m a year earlier. The increase was despite putting almost £139m being put aside to cover loans that may not be repaid owing to the pandemic.

Garner said: “For years we’ve said that we are a low-risk business and we will make less profit than some others in the good times, but we will be resilient and there for our members when they need us in the bad times. And actually I think this financial performance, really proves that.”

Nationwide’s gross mortgage lending fell from £16.3bn to £12.7bn in the six-month period, but Garner said this was because of the lender’s focus on home purchases rather than remortgaging. That resulted in its lending book being harder hit by the UK housing market closure, with market share falling from 12.3% to 12%.

Garner said: “We’ve been quite targeted in our lending. We don’t do market share for market share’s sake.”

Nationwide has also approved about 246,000 mortgage payment holidays since the spring lockdown. Only 15,000 mortgage customers have required more financial support after six months.

While Nationwide has extended its pledge to keep its 663 branches open until at least 2023, Garner has not ruled out further job cuts.

The building society in the process of cutting about 100 roles through a voluntary redundancy programme first revealed to staff in June.