Under the new system which will go live at the end of the week, new or existing customers taking out a mortgage to finance their property move will be looking at an interest rate of 4.73 per cent, and those who are remortgaging – whether the customer is new or existing – will be charged a rate of 4.99 per cent.
This means that a first-time buyer will be charged a good deal less interest on a fixed rate or tracker deal than a current Nationwide customer who is looking to remortgage to a cheaper deal.
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The £99 administration fee for an existing customer choosing to remortgage will be removed, and a £100 loyalty discount has been introduced in the form of a lower reservation fee when switching products, but this is little consolation for borrowers in the current climate of interest rate instability.
James Cotton, mortgage specialist at London & Country commented on this apparent division of customers that, “technically speaking, this is not a departure from Nationwide’s stance of offering a level playing field to new and existing customers – rather it is differentiating between rates offered for homebuying and remortgaging.
“However it remains to be seen whether existing customers will feel this move is in the spirit of Nationwide’s ‘same deal for all’ policy.”
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In contrast, Ray Boulger, senior technical manager at the mortgage brokers John Charcol, exhibited a good deal of surprise at the prospect of such a u-turn, saying, “there’s no way you can legitimately claim you’re offering the same deals for everybody if your existing customers don’t have access to the cheaper purchase rates.”
Nationwide has seen half year profits rise by nearly a third over the course of 2006, mainly credited to a 50 per cent increase in mortgage lending, and is currently involved in the process of taking over itÂ’s rival, the Portman Building Society.
Tamsin Hemsley, a spokesperson for Nationwide, said: “The changes being made allow Nationwide to continue to offer really competitive deals to all customers and compete effectively in the market.
“It has become apparent to us that our members want greater choice and variety when choosing a mortgage product that suits their needs. We believe that these changes mean we can continue to offer market leading rates while remaining true to our core values of fairness, honesty and transparency”
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