Major British Building Society Restricts Cheap Mortgages To Existing Home Buyer Customers Only

One of the UK’s biggest Mortgage Lenders, the Nationwide Building Society, has stopped allowing Home Buyers who are new customers to borrow on its standard variable rate ( often referred to as SVR).

From Monday 1st December, the Nationwide’s Standard Variable Rate Mortgage dropped to just 4.69%, That’s a lot less than that of other lenders. However, it will only be available to Home Buyers who are established borrowers, and who’s fixed or other special mortgage deals have ended.

All banks have been under pressure from the government to pass on the latest cuts in interest rates to their customers. However, a Nationwide spokesman emphatically denied the building society was flouting the government’s wishes. He stated that the rate cuts have been totally passed on to existing customers, but that new customers will only have Fixed rate & Tracker Mortgages available to them. He also pointed out that the nationwide is one of the very few lenders who still provide Standard Variable Rate Mortgages to avybody at all.

Again the Nationwide is demonstrating that it’s not afraid to plough it’s own furrow, and that it is exceptionally resistant to the herd instinct that from time to time has taken over the financial industry. And based on recent history, who can say they are wrong?

During the mid and late nineties the craze was for demutualisation of building societies, which to all intents and purposes changed them into Limited Companies. The attraction at that time was that this would enable these mortgage providers to raise money on international money markets and lend those funds out by buying parcels of (amongst other things) Sub Prime Mortgages. At that time the Nationwide determinedly stood out from the rest of the lenders by asserting the advantages of remaining a mutual, owned by its customers. The great majority of the money that it raised came from its own customers, and the great majorityof its loans were to its own retail Home Buyer customers. Inherent in the nationwides system was a security in knowing both the sources and the users of the business’s funds.

It has constantly argued that without shareholders it could afford to provide better rates to both depositors and borrowers. That has been most visible in its base mortgage rate, which has constantly been about half of one percentage point less than that of most of its competitors.

The unhappy news for the majority of Home Buyers, who’ve become used to shopping around & shifting Home Buyer loans regularly, is that companies like the nationwide feel justified in their traditionalist attitudes, and they’re going to continue with them, so they basically won’t have the funds to lend to everybody who approaches them. That’s despite the fact that Savers are flocking back to the few remaining mutual societies.

That said. If I was trying to Sell my house right now; I’d be showing all potential buyers towards one of those surviving mutual lending companies.

Related articles:

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2. Tracker Mortgages v Base Rate Cut
3. UK Mortgages For The First Time Buyer
4. Dual pricing going strong, says Home Buyer Systems
5. Home Buyer Systems unveils comparison index for brokers