Nationwide has warned the London housing market may face a “natural correction”. The mutual’s chief executive, Graham Beale, said there was already a “slowing down in the market place” as buyers begin to baulk at ever higher house prices. “At some point buyers just start saying no,” he added.

Nationwide’s comments come as it reported that it increased mortgage lending by 31% to £28.1bn in the year to April 4 on the back of the recovery in the housing market. The mutual said it had also approved 31% of all mortgages advanced within the Government’s Help to Buy scheme. However, it added that the number of mortgages it advanced to borrowers with a deposit of 10% or less of a property’s purchase value – which would account for a majority of first-time buyers – remained low, at 2.4% of its total lending for the year. Separately, Mark Rennison, the lender’s finance director, warned that efforts to curb mortgage lending in an attempt to cool the London housing market could have unintended consequences for the rest of the country. He added that concerns about house prices had been exaggerated and did not warrant changes to the Government’s Help to Buy scheme.

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