by Mark Johnston
Nationwide’s Standard Variable Rate Raise!
Figures from the Council of Mortgage Lenders (CML) have shown that Nationwide building society offered an estimated £17.1 billion in mortgage lending last year and increased its share of the market to 12.1 per cent, from 9 per cent in 2010.
It seems that just when the Government’s Funding for Lending scheme appeared to be making a difference to lending, theUK’s largest building society goes ahead and hikes the interest rates on their tracker and fixed rate mortgage products.
Nationwide has announced that it is making increases of 0.3 percentage points on some of its fixed-rate products from September and 0.2 percentage points on tracker mortgages. Although it has stated that their NewBuy and four-year fixed rates will remain unchanged.
However, borrowers who are already with Nationwide and choose to stay with the society for their next deal will be offered rates priced at 0.1 percentage points below the new products, meaning they face a softer blow than new customers.
Tracie Pearce, Nationwide’s head of mortgages, said: “We wanted to give existing customers the clear message that their loyalty is valued”.
Many experts have been left wondering why Nationwide is now choosing to actually up their rates instead of slashing them, especially since the Funding for Lending scheme was put forward precisely to discourage this kind of behaviour in financial service providers.
Nationwide building society will not confirm whether it will access the ‘funding for lending’ scheme, but they did state that the decision to raise rates was not due to a lack of mortgage funding and had been made to keep it in line with rivals and not be overly competitive.
A spokesman for Nationwide said the increases to its rates had been made to keep the lender in line with the rest of the market and its products remain competitive.
Andrew Montlake, of independent mortgage broker Coreco, said: ‘It is always difficult for lenders to maintain service levels in the current market as they have less staff and demand for mortgages does not seem to be as tepid as some like to make out.
Research has shown that big banks and building societies have increasingly sought to limit the availability of their best deals while still offering eye-catching rates.
Some financial experts say that this raise is the latest shuffle in the elaborate dance that our banks and building societies are involved in when it comes to home loans.
Santander also recently announced plans to raise their standard variable rate (SVR) on its mortgages in a move which means hundreds of thousands of existing customers face mortgage hikes from this autumn.
Clare Francis, a mortgage expert at comparison website MoneySupermarket, said: “The rates are going up and that is disappointing to see”.
Marc Gander, founder of the Consumer Action Group, which provides free consumer help, saidof the recent rate increases, “it is shocking, it has come at a time when people need this thing least of all.”
In conclusion many people believe that it is banks and building societies that got us into this mess, so it is little surprise that they are all too willing to do nothing to help the economy recover properly.
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