The UK’s second biggest mortgage lender grew its market share of prime mortgage lending to 13.4%, from 12.8%, while internal product switching also continued to grow.

Nationwide is also investing heavily in technology, however the competitive mortgage market hit the mutual’s income and its savings rates.

The average rate paid by prime mortgage borrowers fell during the year to 2.34% from 2.45% in 2018.

This included more than £4bn of base mortgage rate loans moving off, while £26.5bn of prime mortgages switched onto a new mortgage deal at the lender.

LTV up as house price rises slow

Overall the society’s profit fell to £788m from £977m last year, but this drop included a deduction of £227m for asset write-offs and additional investment in technology.

Nationwide said it helped a record 77,000 first-time buyers into their own homes, up from 76,000 in 2018.

Total net mortgage lending for the year increased by £2.8bn to £8.6bn.

Arrears performance has remained stable during the year, with cases more than three months in arrears at 0.43% of the total portfolio.

The average (loan to value) LTV of the portfolio increased to 58% from 56% reflecting new lending, offset to a lesser degree this year by house price growth.

“While there are no signs of deterioration in the residential mortgage portfolio, with the immediate outlook for the UK and the house price index (HPI) being less certain, the expectation is for a gradual rise in LTV from current low levels,” Nationwide said.

It also noted that there had been a slight shift in new business type from its prime to specialist lending “reflecting an increase in buy to let low LTV remortgage business and, following a successful pilot, the embedding of our lending to limited companies”.

Nationwide also reduced its level of lending at income multiples of 4.5 or higher to 7.7% of new business in the year, down from 8.3% last year and well below the 15% limit.

Strong mortgage volumes

Chief executive Joe Garner said 2018-19 was a strong year for Nationwide with more people choosing it for their mortgages, savings or current accounts.

“We kept average deposit rates more than 50% above the market average, and launched attractive new rates on loyalty accounts,” he said.

“However, in an environment where mortgage rates are low, there are limits to how much we can pay to our savings members.

“Despite economic uncertainties, mortgage volumes remained strong and our competitive mortgage pricing meant we lent more to home buyers and landlords on both a gross and net basis.”

Garner added: “We also decided to invest an extra £1.3bn in technology over five years so that we can meet members’ changing needs.”