Nationwide reports strongest financial performance on record, but warns inflation could hit house prices

Swindon-based building society Nationwide has announced annual profits nearly double last year's - its strongest financial performance on record – but has warned inflation could lower house prices.

The lender reported a pretax profit of £1.6 billion on Friday (May 20) - up from £823 million the previous year.

Finances were boosted by a strong economic recovery from the pandemic, and a £6.9 billion increase in gross mortgage lending.

"Our financial performance for the year was the strongest on record," confirmed CEO Joe Garner

But he warned inflation could hit the housing market.

"The UK economy has proved resilient in recent years with low levels of unemployment.

"The emergence of higher inflation, which has been exacerbated by the war in Ukraine, is likely to exert a significant drag on the economy in the near term.

"Higher inflation will place significant pressure on household budgets, especially for those on lower incomes who also accumulated fewer savings during Covid-related lockdowns," he said.

"Housing market activity remains higher than pre-pandemic levels, with prices increasing at a double-digit annual rate so far in 2022 as demand from those wanting to move home exceeds the number of available properties.

"Higher property prices and interest rates, together with steep increases in the cost of living, mean housing has become less affordable and we expect housing market activity to slow and the rate of house price growth to moderate in the coming quarters.

"There is a risk of a downward movement in house prices, given the pressure on household budgets.

The mutual confirmed the date of Joe Garner's departure as CEO of June 2. As announced in December, he will be replaced by Debbie Crosbie, the first female chief executive in the building society's 175-year history.