Britain's largest building society is experiencing mixed fortunes after it boosted its deposit levels from savers but saw a fall in mortgage lending.
The Nationwide Building Society attracted £1.5 billion in deposits between April and June as its competitive accounts enticed savers to move their funds.
Member deposits grew from £130.5 billion to £132 billion in the second quarter.
Savers have scoured the market for better rates as the low Bank of England rate and the after-effects from the Funding for Lending Scheme have ensured miserly returns on savings accounts.
Some have identified current accounts as a new solution to their savings woes. The ease in switching current accounts has allowed institutions to attract customers from rivals with attractive interest rates on in-credit balances.
Nationwide’s FlexDirect account, which offers an equal-market-leading 5% on deposits of up to £2,500 for the first year, has proved a popular destination for switchers.
The mutual’s share of the current account market reached 6.4% of the market by the end of June after it attracted around 110,000 new customers in the three-month period.
Mortgage Market Tempered
Nationwide’s second-quarter reports also showed a fall in mortgage lending for the first time since the crux of the financial crisis.
Gross approved mortgage lending reached £5.8 billion between April and June – around 9% lower than during the same three months in 2013.
The figures could suggest that the housing market is beginning to moderate – a position that Nationwide has advanced throughout the summer in its monthly House Price Index.
Robert Gardner, Nationwide’s chief economist, said that a “modest rebound” in approvals in June suggests that any slowdown will prove temporary.
“With the labour market strengthening, mortgage rates expected to remain low and consumer confidence rising, activity is likely to recover in the months ahead”, he added.
Mr Gardner added that the trajectory of house prices, and thus affordability, would remain dependent on the growing supply of homes.
Housing developments seem to be picking up, with construction giant Bovis Homes recently announcing huge growth in pre-tax profits. The firm has bought up land with enough space to develop over 4,000 homes.