Residential mortgage lending

The vast majority of our lending portfolio consists of UK residential mortgage loans to individuals. Our policy is for all residential mortgage loans to individuals to be fully secured first priority loans.

We are one of the largest residential mortgage lenders in the UK. We have a national franchise within the UK, with a concentration of lending in south-east England, including London. At 30 September 2009 the prime mortgage lending portfolio was £110.4 billion.

We offer a wide range of fixed and variable rate mortgages that are typically for terms of twenty-five years. However, the average term of our residential mortgages is typically between five and seven years because of the high level of early redemptions typical in the UK residential mortgage market. To reduce the costs associated with early repayment of mortgages and to recover a portion of the costs of mortgage incentives, we impose early repayment charges on some products.

The high asset quality of our UK residential mortgage lending has been sustained through our continued low risk lending strategy. The overall proportion of mortgages 3 months+ in arrears as at 30 September 2009 for prime mortgage business was 0.50%, compared to the industry average of 2.40 % (all mortgage lending).

We also provide specialist lending including Self-Certified and Buy to Let mortgages.

Following the merger in August 2007 of the Nationwide and Portman Building Societies, the Group has operated two specialist mortgage lending brands, UCB Home Loans and The Mortgage Works. On 20 October 2008 the Group announced that all new specialist lending will be conducted solely through the TMW brand.

As at 30 September 2009 the specialist lending portfolio had total mortgage balances of £18.4bn. Mortgages 3 months+ in arrears as at 30 September 2009 was 2.39%*, compared to the industry average for all mortgage lending of 2.40%.

*Nationwide originated accounts