Mortgage lending at Nationwide fell from £3.6billion to £1billion in the six months up to September, causing its total market share to fall from 6.2 to 5.6 per cent.

The half year results from Britain’s biggest building society come at the same time as the Royal Institute of Chartered Surveyors has announced that house sales have fallen to a new low.

“Our forecast is now for the total mortgage market to be valued at £18bn this year, compared with £90bn last year.” Tony Prestedge, the group development director at Nationwide, was quoted as saying by The Independent.

Nationwide also expects house prices to continue to fall steadily for the remainder of this year and well into 2009.

In the report, released yesterday, Nationwide Building Society said that it has shown a “resilient performance in an exceptionally turbulent market place, Nationwide is strong and well placed compared to its competitors”.

Nationwide has a balance sheet funded predominantly by retail savings, attracting £2.6billion in net receipts this year, an estimated market share of 34 per cent. The group’s total net lending of £1.2billion was entirely funded by retail deposits.

Many other lenders have suffered due to high exposure to the sub prime mortgage crisis in America, but, while Nationwide has also made writedowns as a result, it says that its “conservative and sustainable approach” to lending has supported it though the tough times.

And its proportion of mortgage customers who are in more than three months of arrears stood at 0.40 per cent in June 2008, considerably less the Council of Mortgage Lenders’ industry average of 1.33 per cent.

“Nationwide has delivered a solid performance in a difficult market with pre-tax profit increasing by 11 per cent to £374 million,” said Nationwide’s chief executive Graham Beale.

“Our resilience proves that the building society business model can be particularly effective during turbulent market conditions in providing both security and good value to members,” continued Mr Beale.

“We continue to manage our business prudently in response to market conditions and to maintain our relatively low exposure to wholesale market risks,” he said.

© Fair Investment Company Ltd