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Nationwide Building Society has reported a drop in profits in its 2009 half-yearly financial report due to a ‘dramatic' fall in commercial property prices.
Pre-tax profits for the six months to the end of September were £143m, down 62% on the £374m reported a year ago.
Bad debt charges on commercial property loans rose to £180m, from £146m in the previous six months and £25m in the same period last year.
The proportion of mortgage accounts three months or more in arrears with payments by the end of September was little changed from the previous six months, at 0.66%.
The average loan-to-value rate for new residential mortgages was 63%, little changed from the 60% of the previous six months.
Graham Beale, chief executive of Nationwide, said it expected the remainder of 2009 and 2010 to present a very difficult trading environment.
The building society has also forecasted a slow recovery for the UK economy and the housing market from recession.
Rising unemployment would "inevitably" push house prices downwards in 2010 and interest rates would probably remain at their record low of 0.5% until "at least Q4 2010", the society said.
Beale said: "The growth in house prices over recent months appears to be driven by lack of supply, and growth in unemployment throughout 2010 will inevitably exert downward pressure on house prices."
The January/February 2012 issue of Your Mortgage is on sale now. In it we feature expert predictions on what will happen to house prices, interest rates and the wider economy in 2012. We also explain the latest State help for first-time buyers, weigh up the relative merits of offset mortgages, and offer handy hints and tips on making sure you have the right home insurance in place. Plus we have all the regular features and our invaluable mortgage basics section. Get your copy now for the latest news, information and help
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