The cost of living crisis is having an unequal impact on people in the UK, with higher prices having the biggest impact on those who were already struggling, Nationwide Building Society said on Friday.
The warning came as the UK’s largest building society said that it expected rising inflation and shrinking household budgets to slow growth in mortgages and house prices in coming months.
“At this moment in time, we haven’t seen significantly more people fall into financial difficulty,” said chief executive Joe Garner. “Those already struggling are finding it even more tough.”
“The great injustice of this: the lower your income, the larger proportion is spent on food and fuel. By definition this hits the poorest hardest,” he added.
His comments came as Nationwide reported results for the year to April 4, when mortgage growth and higher interest margins helped pre-tax profits to almost double to £1.6bn, up from £823mn the year before.
These will be Garner’s last set of results, with former TSB head Debbie Crosbie due to take over the bank in June.
“The cost of living crisis affects every person in a different way,” he said. “In our view we don’t need a mass solution, but individual attention.”
Gross mortgage lending rose from £29.6bn to £36.5bn. The net interest margin, the difference between the interest it gets on its loans and securities investments and the rate it pays for deposits, rose by five basis points to 1.26 per cent.
Rate hikes from the Bank of England have led UK lenders to increase the interest rates on mortgages. That, in turn, has led to a surge of mortgage applications as borrowers rush to lock in rates before they get any higher.
“The housing market has been remarkably resilient so far this year — it has continued to run above pre-pandemic levels for the first three months,” said Robert Gardner, Nationwide’s chief economist. “But with the pressure expected in coming quarters, it seems logical it will slow.”