Nationwide says its mortgage policy is winning custom

Profits at the society were up 21% to �426.8m ($759.8m) helped by the UK's buoyant housing market.

Net mortgage lending was up 81% to �13.2bn giving Nationwide a 12.8% market share, with arrears at a record low.

"We have been very successful at retaining existing customers and attracting new business," said chief executive Philip Williamson.

Slowdown, but no slump

Nationwide said its move to scrap introductory discount rates for mortgages - which initially led to a sharp drop in its market share - was succeeding.

Words such as 'crash' and 'slump' are totally inaccurate - there will be a progressive slowdown (in the housing market) over the remainder of this year Philip Williamson, Nationwide

The 12.8% market share figure was, it said, "clear evidence that treating all our mortgage customers fairly is definitely paying off".

However, Nationwide said it expected its net mortgage lending to rise more slowly over the coming year.

And it forecast that house price and mortgage lending growth would slow in the next 12 months as higher interest rates took their effect.

But Mr Williamson said there was no danger of a property price crash.

"We believe some of the language that has been used by a number of commentators has been slightly emotive and inappropriate," he said.