The UK's biggest mutual said yesterday the Bank of England's Funding for Lending initiative had helped finance a boom in mortgage lending – but also warned of the damaging impact on savers.
Nationwide chief executive Graham Beale said the building society had advanced £10.2bn in home loans during the six months to September, 15 per cent ahead of a year earlier and the biggest sum for more than four years. Net lending – new loans minus repayments – of £3.2 billion was more than double last year.
Mr Beale said the lender had drawn down £509m under the FLS, which allows lenders to access cheap funding lines in return for growing their lending, helping 20,000 borrowers secure a home
The initiative is having an early impact on mortgage rates, but the glut of cheap funds is also hitting savers because lenders no longer have to compete as fiercely for deposits, the chief executive said. "Average savings rates are down by between 0.5 and 1 per cent," he said.
The mutual is also parking its tanks on the lawns of the rest of the banking industry after 51,400 switched their current accounts to Nationwide, more than double the number of switchers seen a year ago.