Nationwide freezes rate cut on trackers (From Bournemouth Echo)

Nationwide freezes rate cut on trackers

7:00am Saturday 3rd January 2009 in

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MORE than 200,000 borrowers with tracker mortgages from Nationwide, which has its administration centre on Richmond Hill, Bournemouth, will not receive further cuts if the base rate continues to slide. In a bid to retain profits as the economic downturn bites, the lender is freezing its tracker mortgage, which follows the Bank of England’s base rate, when it falls below two per cent.

Nationwide spokesman Steve Blore said that the policy was prudent and appropriate given the “volatile and challenging” market and that to maintain the building society’s position, it was necessary to balance its offerings to both borrowers and savers.

While tracker customers will not receive any further rate cuts, Nationwide’s policy will not affect customers with standard variable rate mortgages.

Sam Everett from Bournemouth has had a Nationwide mortgage for the last two years but chose a fixed rate, which ends next month, rather than a tracker because he likes to know his monthly outgoings.

He said: “It’s frustrating that lenders like Nationwide will not pass cuts on to their tracker customers but I prefer a fixed rate because it allows me to know where I stand.”

Current Nationwide mortgage customers can obtain loans of up to 95 per cent while first time buyers need a 25 per cent deposit.

Nationwide is not the only lender to impose tracker mortgage restrictions. Until last month Britain’s biggest lender, Halifax had a policy where its tracker mortgage would not fall below a base rate of three per cent but the Financial Services Authority ruled that it was not enforceable.

Yorkshire, Skipton, Norwich & Peterborough building societies have similar rules.