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Credit Crunch Halves Nationwides Lending

Nationwide, the UKs biggest building society, cut its mortgage lending in half last year as it halted an expansion drive and turned to retail savers to fund growth during the credit crunch.

The building society, owned by its 14 million members, also revealed a £103 million impairment charge as a result of its exposure to six structured investment vehicles.

Nationwide, the second largest UK mortgage provider, said residential mortgage lending totalled £7billion over the year to the beginning of April.

Last year, Nationwide lent its customers £11billion over the same period.

Nationwide has said it will take a "conservative and sustainable approach to lending". The move meant that its market share fell from 11% to 7%.

The lending decline at Nationwide, 2cnd as a home loans provider to Halifax, underscores how the collapse in confidence in the US housing market has pushed UK lenders into retreat.

The announcement came a day after Paragon, said it had halved its lending in the first half of its this year.

Nationwide said it chose to use a more cautious policy last year but that lending had derailed particularly sharply during the second half.

Despite the decline, Nationwide have been able to report a 5% increase in pre-tax profits to £686million and a 17% improvement in profits for the year.

The society, said it had retail deposits of £9 billion - a market share of about 19%.