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.

Nationwide Building Society Responds to Expanding Customer Base with Implementation of Nomis Solutions’ Customer-Centric Pricing Optimization Technology

San Bruno, CA (PRWEB) December 10, 2008 — Nomis Solutions, the leading provider of best-in-class Pricing and Profitability Management for financial services companies, announced today that Nationwide Building Society has selected the Nomis Price Optimizer™ to better tailor the pricing practices of its Personal Loans Business to its customers. The Nomis Price Optimizer allows Nationwide to optimally extend credit to more consumers, while accounting for various corporate requirements and market conditions. Nomis Price Optimizer also enhances Nationwide’s ability to meet regulatory requirements by providing more visibility and the ability to audit its pricing decisions.

News ImageNationwide is the largest member-owned building society in the United Kingdom, with 14 million members and assets of over £186 billion. The Nomis Price Optimizer allows Nationwide to better serve its customers, augment its previously tiered approach to lending, and offer rates that are tailored to the market, account for risk, and best suited to the customer. Nationwide’s borrowers are assured that the pricing process is efficient, consistent, and transparent to meet regulatory requirements.

We’ve partnered with Nomis Solutions to use a more customer-centric and tailored approach to pricing that will enable us to price our unsecured loans business appropriately and prudently
The Nomis Price Optimizer enables us to understand the impact of pricing on customer response and use that insight to make smarter pricing decisions in this difficult environment.
Nationwide understands the power of pricing and how it can be used strategically to expand its customer base in the most intelligent and customer-centric way
Contrary to many institutions that are responding by providing consumers with fewer options, Nationwide’s adoption of the Nomis Price Optimizer positions the company to better manage through the difficult financial market and optimally serve its customers’ needs.
“We’ve partnered with Nomis Solutions to use a more customer-centric and tailored approach to pricing that will enable us to price our unsecured loans business appropriately and prudently,” said Simon Beresford, Head of Consumer Lending for Nationwide Trust. “The Nomis Price Optimizer enables us to understand the impact of pricing on customer response and use that insight to make smarter pricing decisions in this difficult environment.”

The Nomis Price Optimizer provides Nationwide with a strong compliance framework and a set of pricing best-practices and processes that make it easier to demonstrate adherence to regulatory and corporate rules and guidelines. Nationwide’s implementation of the Nomis Price Optimizer provides the pricing team the ability to track, store and provide visibility into all past pricing decisions, as well as the rationale for those decisions.

“Nationwide understands the power of pricing and how it can be used strategically to expand its customer base in the most intelligent and customer-centric way,” said Frank Rohde, Chief Marketing Officer of Nomis Solutions and Managing Director of the company’s European operations. “Contrary to many institutions that are responding by providing consumers with fewer options, Nationwide’s adoption of the Nomis Price Optimizer positions the company to better manage through the difficult financial market and optimally serve its customers’ needs.”

Nationwide Building Society

Nationwide is the world’s largest building society with over 14 million members and assets of over £186 billion. Nationwide has mutual (as opposed to Public Limited Company) status, which means that it is owned by its members and is run day-to-day by an executive management team overseen by an elected board of directors.

Nationwide offers a broad range of retail financial services including mortgages, savings, current accounts, life assurance and investment products, personal loans and household insurance. The Society is the UK’s third largest mortgage lender and the second largest savings provider. Nationwide’s members can manage their finances through over 900 retail outlets, by telephone, internet and post. The Society has around 19,000 employees. Nationwide’s head office is in Swindon with administration centres based in Northampton and Bournemouth.

About Nomis Solutions

Nomis Solutions enables best-in-class Pricing and Profitability Management for financial services companies. Through a combination of advanced analytics, innovative technology, and tailored business processes, the Pricing and Profitability ManagementTM Suite delivers quick time-to-benefit, and improves financial and operational performance throughout the customer acquisition and portfolio management processes.

Select customers include Abbey, AmeriCredit, Bank of Montreal, Chrysler Financial, HBOS plc, Nationwide, and Royal Bank of Canada. Visit www.nomissolutions.com or contact us at info@nomissolutions.com or +44 0207-031-8273.

Nomis Solutions, the Nomis Price OptimizerTM, Nomis Offer OptimizerTM, the Customer Portfolio OptimizerTM and the Nomis Pricing and Profitability ManagementTM Suite are trademarks or registered trademarks of Nomis Solutions, in the United States and in other countries. Other product and company names herein may be the trademarks of their respective owners.

House prices suffer smallest drop in 12 months

The average house price fell by just 0.4% in November, according to the Nationwide House Price Index.

The value of the average house fell by just £430 in November – significantly less than in previous months. Between April and May, for example, prices fell by around £5,000.

This means the annual rate of house price decline has dropped from 14.6% last month to 13.9%.

Mortgage provider Nationwide Building Society stated that although the fiscal measures announced in the Pre-Budget Statement could have some indirect effect on the housing market, the measures announced to improve activity in the mortgage / housing market are more likely to help.

The Nationwide Press Release went on to state that ‘The estimated one-third of borrowers on tracker mortgages will have benefited one-for-one from base rate cuts. About one fifth of borrowers are on their lender’s standard variable rate (SVR) [mortgage]. Although SVRs do not change automatically when the base rate moves, most lenders have so far passed on a large part of the Bank of England’s 2.75% worth of base rate cuts since December 2007’.

Finally, it stated that while people on a fixed-rate mortgage don’t benefit directly from the cuts, they will face ‘much less of a payment shock’ when they come to the end of their mortgage deals.

Nationwide drops fixes but stays away from trackers

Nationwide is cutting fixed rate deals by up to 0.80% but has confirmed it has no current plans to introduce new trackers.