Nationwide confirms chopping agency network in estate agents' offices

Nationwide's nework of 130 agencies, most of which are based in estate agents, definitely face the axe, after the mutual made huge losses on its rock-bottom, over-generous 2.5% tracker rate mortgages.

The agencies facing the chop operate under the  Nationwide banner.

The closures were decided in SEptember but confirmed by a Nationwide spokeswoman this morning. They come as part of a slimming-down exercise, after the lender made a loss of  £300m in the last six months because most of its customers are on its base rate mortgage, capped at just 2% above Bank of England base rate of 0.5%. Had it charged 4%, it would not have made the loss.

The 2% cap will cease at some point, but only for the newest borrowers. Those who took out the mortgage after April 29, 2009, will revert to the standard mortgage rate of base rate plus 3.49% when their deals end. Meanwhile, the losses will continue completely unstemmed for some months at least.

The cost-cutting is, however, already paying off. Despite the hammering on its base rate mortgage, the mutual has revealed good half year results, with a 26% rise in profits to £147m.

But Nationwide also warned that the weak housing market will continue through next year.  It said buyer demand would stay low, as uncertainty over the economy continued.

The building society, reporting on the first half of its financial year, the six months to the end of September, said its gross residential lending was £6bn, of which £4.7bn was prime lending and the remaining £1.3bn of specialist lending was almost all buy-to-let mortgages.

The proportion of Nationwide mortgages three or more months in arrears is 0.67% – far less than the industry average of 2.15%.