Sounds Sensible

Chief executive Graham Beale said the trend would continue for the rest of the year, though falls will remain “within single digits”. Nationwide lent just £6.7bn to homeowners for the year to April 4, a 37pc fall from the £11.2bn advanced in 2006.

As a result, its share of new residential lending crashed to 7.1pc from 11pc. Chief executive Graham Beale said: “We took a decision to only grow the balance sheet to the extent that it is retail funded. We don’t want to bring additional funding risks onto the balance sheet in this market.”

He added that the policy would remain in place until “we see wholesale markets become more receptive”. A record level of retail deposits last year, almost tripling from £3.3bn to £9.1bn as Nationwide benefited from the collapse of Northern Rock, helped mitigate what would otherwise have been a far sharper fall in mortgage lending.

Markets change, participants in them change their behaviour.  No apparent need for bureaucrats to tell them to do so. Sounds like a pretty good system to me.

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