The UK's biggest building society reported today that lending has plummeted by 40% in the 12 months leading up to April this year.

In this period, Nationwide lent £6.7 billion in the form of home loans. Nationwide funded the lending through retail deposits, which trebled to £9.1 billion.

Commentators have attributed the huge increase in deposits to the credit crunch. Investors are taking advantage of high savings rates as banks strive to build their margins after huge write downs; deposit accounts are usually seen as a safe haven, particularly when the equity markets are volatile.

Many saw the credit crunch as an opportunity for Nationwide to grab mortgage market share from risk shy banks, but this doesn't seem to be borne out by the figures. The mutual's share of the mortgage market shrank to 7.1%, down from 11% in the preceding year.

Nationwide's market share in retail savings increased to 19%, suggesting that the lender - like the majority of the marketplace- is concentrating on building margins and low risk residential mortgage lending.

Chief Executive Graham Beale described the economic landscape as "unprecedented", adding "It will be the first quarter of next year before we are through the worst of this."