Swindon-based Nationwide building society today vowed to pass on last week’s interest rate cut to borrowers while also locking in rates for savers.
The pledge came despite the building society revealing its margins are under pressure as a result of what it called “sustained levels of competition in the mortgage market”. 
The building society also today reported an underlying profit of £368m in its first quarter.Gross mortgage lending during the three months from April 5 to June 30 climbed by 26% to £8.6bn, giving Nationwide a market share of 15%.
In a savings market under pressure due to historic low base rates, the society increased member deposits in the first quarter by £2.6bn while its ability to win customers from the traditional high street banks continued with current account openings increasing by 21% to over 139,000.
The society is the UK’s second-largest mortgage and savings provider, employs around 17,000 people – 7,000 of them at its flagship Swindon HQ.
Its first quarter results today come just over a week after the Bank of England slashed its base rate from 0.5% to a record low of 0.25% amid fears that the banking sector would fail to pass on the full cut to borrowers while leaving savers facing wafer-thin interest rates.
But Nationwide chief executive Joe Garner said: “As the world’s largest building society, we are in the fortunate position to be able to take a long-term view and focus on providing great service, security and stability for our members.
“This will be particularly important in a time of increased uncertainty and market volatility following the EU referendum.”
He said Nationwide would pass on the Bank’s base rate decrease in full to existing Base Mortgage Rate (BMR), Standard Mortgage Rate (SMR) and tracker mortgage customers.
“In addition we will protect members who save regularly and who are building up a deposit to buy their first home; as a result, the Flexclusive Regular Saver at 5%, the FlexOne Regular Saver at 3.5% and the Help to Buy ISA at 2% are being maintained at their current rates,” he added.
“Looking forward, we remain focused entirely on the needs of our members, particularly during times of uncertainty.”
The society's net interest margin in the quarter was 1.35% - down on its full-year margin 1.52% in the year to April 4. Nationwide blamed the impact of sustained levels of competition in the mortgage market and warned of further pressure on margins with expectations that the low interest rate environment will persist or that rates may decrease further in the wake of the EU referendum decision.
Finance director Mark Rennison said: “Nationwide’s strong trading performance provides the backdrop to a satisfactory financial performance for our first quarter of the new financial year.”
