The UK's largest mutual forecasts slower house price growth

The lender saw annual pre-tax profits increase to �517m for the 12 months to 4 April from �427m for the year before. Its mortgage lending business slowed, with net advances of �10.9bn against �13.2bn a year earlier.

The Nationwide now forecasts a 0-2% rise in house prices this year, down from its previous 2% forecast.

Gentle cooling

In an interview with BBC News, Nationwide chief executive Philip Williamson reaffirmed the firm's belief that the housing market will cool but not crash.

He added that a slowing housing market will not negatively affect Nationwide's results for the current financial year because of the "strength of its ongoing business".

People are now much less willing to tap into the available equity on their homes Nationwide chief Philip Williamson

"It is key to remember that interest rates are still not far from historic lows and the UK enjoys decent employment.

"We are not looking at a repeat of the late 1980s and early 1990s."

"We believe that interest rates will remain around the current 4.75% mark for the next 12 months," he said.

Knock-on effect

He said that the five interest rate rises over the past 18 months had slowed the housing market.

The rate rises have had a noticeable knock-on effect on the wider economy, he said.

"People are now much less willing to tap into the available equity on their homes, and you can already see this is having a knock-on effect on the High Street, with a number of retailers seeing poor results," he said.

"It shows how vital a buoyant housing market is for the wider economy."

During the past year more than 875,000 new customers joined the Nationwide, equivalent to some 2,500 a day.

The building society now has more than three million current account holders, and an 11.8% share of the UK mortgage market.

More than one million Nationwide credit cards are now in use.