Nationwide sales plunge

Nationwide is suffering an 80% fall in sales of home loans through mortgage brokers - presenting a serious challenge to its claim to be the country's fourth largest lender.

The fall follows a new strategy whereby Nationwide stopped offering low rates to attract new customers at the expense of established borrowers.

The move is said to have caused a damaging rift among the building society's top management, but today chairman Charles Nunneley will attempt to present a unified and determined stance against Nationwide's critics.

He will tell the annual gathering of building societies in Harrogate that others should follow its brave decision to stop chasing new business.

One senior industry source calculated that Nationwide was now attracting business at the same levels of much smaller lenders, such as Chelsea building society. This is already prompting some mortgage lenders to stop following the Nationwide's house price index which is based on new business levels, according to sources.

Yesterday, one of the country's largest mortgage brokers confirmed the scale of the challenge facing Nationwide. David Hollingworth at London & Country said the building society's new sales were just 20% of what they were three months ago before the new mortgage strategy was unveiled.

The position is a dramatic reversal of the strategy of just six months ago when Nationwide boasted it was beating its historic market share of 8.5%, selling some 10% of all new mortgages taken out.

The full extent of the Nationwide's mortgage position will be revealed next week when it announces its annual profits. The building society is expected to gloss over the dramatic fall in business from mortgage brokers - some 50% of its total lending - by claiming that branch business is at all time highs.

Last night, Nationwide said it was ahead of the new targets for business it had set when the new mortgage policy was introduced.

A spokesman for the society denied suggestions that the management was divided over the policy.