Building society Nationwide yesterday said its business had been hit by new rules on home loans as gross mortgage lending fell 9% during the first three months of the year.
The lender, one of the UK’s largest mortgage providers, reported a decline during the quarter to June in what was interpreted by many as the latest sign of a cooling of the housing market.
Its market share shrank to 11.4% from 15.5%, following a strong period last year.
Competitors have since stepped up the pressure following a more cautious period in which regulators obliged them to build up their capital base.
However, Nationwide was boosted by a rise in current accounts and savings deposits as underlying pre-tax profits more than doubled to £263 million.
Overall home lending came in at £5.8 billion.
Finance director Mark Rennison said it was “difficult to gauge” just how long the housing market would continue to display signs of a slowdown in some quarters.
But he stressed it was unlikely to fall “to any really significant degree”, particularly as the supply of housing demand continued to fall short.
“It is another instalment of some evidence that the market is certainly not continuing to heat up, and there is a degree of cooling going on,” he said of the latest figures.
The results come as data from property website Rightmove showed a steep monthly fall in asking prices, though this was heavily skewed by the property market in the south-east of England.
Mr Rennison said there had been some impact from the introduction of the Mortgage Market Review new rules under which lenders have to ask borrowers more detailed questions to check whether they can afford their loan.
He said implementing the rules could have taken some focus off competition during what Nationwide called a “period of adjustment” for the industry.
Meanwhile, yesterday’s quarterly results showed that deposits grew by £1.5bn to £132bn and current account market share rose from 6.2% to 6.4%.
The impact of changes to ISA investment rules and limits, which came into force at the start of last month, will be shown in Nationwide’s next set of results.
Nationwide chief executive Graham Beale said the society’s first quarter had delivered “another strong set of results”.
“Nationwide has continued to help members to save, buy their own homes and manage their money in a way that suits their needs,” he said.
“As a result, member deposits increased by £1.5bn, we grew our share of current accounts to 6.4% and we supported the housing market, helping over 23,000 people to buy their home, with gross mortgage lending of £5.8bn.”
The figures comes after Nationwide more than doubled full-year underlying pre-tax profits to £924m during the year to April 4, growing gross mortgage lending by 31% in the 12-month period.