Nationwide Building Society , the country's second-biggest mortgage lender, reported a 26 percent jump in first-half profit, and said it did not expect big house price falls despite signs of property market weakness.
Nationwide, which publishes a closely watched monthly house price survey, said on Tuesday major price falls were unlikely in 2011 because continued low interest rates would keep mortgages affordable and prevent a flood of distressed sales.
Mutually-owned Nationwide made an underlying pretax profit of 147 million pounds in the six months to end-September.The improvement reflected a 44 percent drop in bad debts as a partial recovery in commercial property prices since mid-2009 helped more customers avoid defaulting on loans.
Britain's retail banks have all reported stronger profits in the past year as tighter lending criteria and a tentative economic recovery have helped reduce loan impairments.
Mortgage and savings-focussed Nationwide, the country's biggest customer-owned lender, has emerged as a relative winner from the financial crisis, snapping up financially weaker rivals including the Cheshire and Dunfermline building societies.
The Bank of England, which slashed interest rates to 0.5 percent during the crisis two years ago, was unlikely to start raising borrowing costs until the end of 2011, Nationwide said.
"We think house prices will remain relatively flat for the next few months, with some possible downward migration, but nothing significant," chief executive Grahame Beale told reporters on a conference call.
Surveys show house prices have been falling over the past three months, reflecting scarce mortgage finance and worries over the economic impact of government spending cuts aimed at reducing Britain's budget deficit.
Nationwide also said it was losing out on 300 million pounds per year because of a pledge to cap its base mortgage rate at two percentage points above the Bank of England rate, relative to the typical 4 percent rate offered by other lenders.
Over a third of Nationwide mortgage customers now pay the base rate, and more are choosing to revert to it when their fixed-term loans expire, the company said.
Wow, thank goodness some good news from the banks in the UK. I do really like this part -""We think house prices will remain relatively flat for the next few months, with some possible downward migration, but nothing significant," chief executive Grahame Beale"
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