Nationwide profits dipped in the first half as it warned on competition in the mortgage market.
Underlying pre-tax profits fell to £588m in the six months to the end of September, down 4.3 per cent on the year before. Total underlying income dipped 0.2 per cent to £1.64bn.
Gross mortgage lending fell 4.6 per cent to £16.7bn, although the average loan to value ratio of new loans stuck at 71 per cent.
Meanwhile, deposits dipped to £1.8bn, from £4.7bn the year before.
Read more: Nationwide scales back buy-to-let mortgages
Why it's interesting
The consumer debt market might be flourishing, but with one interest rate hike under the Bank of England's belt and more on the (admittedly distant) horizon, borrowers are anticipating tighter conditions.
Despite that, Nationwide said it had a strong year: stripping out the effect of a £26m sale of its stake in VocaLink, compared with a £100m disposal of a stake in Visa during the same period last year, profits actually rose.
But although demand for mortgages was solid during the six month period, it said "intensifying competition" in the market may lead to "moderation" in the number of mortgages it lends.
"Although mortgage volumes remain strong, we're prepared for the possibility that intense competition combined with declining consumer confidence may lead to a moderation in gross lending and market share in the second half of the year," it said.
Meanwhile, November's interest rate hike, the first in almost a decade, will only have a "modest" impact on most households - but it added that the squeeze on consumer spending may begin to bite.
"There are... some signs of a squeeze on household finances from low wage growth and above-target inflation. Our member panel tells us people are beginning to cut back, particularly on savings and discretionary expenditure, which is not surprising when real incomes are falling."
What Nationwide said
Chief executive Joe Garner said:
Nationwide is in very good shape after another strong set of results. The second half may bring tougher trading conditions, but we remain well placed to stand by our members in these uncertain times. Nationwide is financially secure and will continue to promote the long-term interests of both the Society and our members.