Nationwide Reneges on Mortgage Deal

Nationwide has announced that it is to scrap its highly publicised guarantee that new and existing customers will receive the mortgage same deals.

As from December 1st, existing Nationwide customers who want to change deals, borrow more or remortgage will be penalised by higher rates.

Mortgage brokers claim that Nationwide had reneged on its principles.

In the recent Nationwide advertising campaign (Nationwide's slogan is "proud to be different"), the society promotes its promise to offer all customers the same rates.

The advertisements also criticise other lenders that offer better deals to new clients, but fail to reward the loyalty of existing customers.

Melanie Bien, of Savills Private Finance, the mortgage broker, said:

"This is a real shame. Nationwide made a principled stand, promising existing and new customers that no one would receive preferential rates. This guarantee no longer stands."

The new policy favours first time buyers and people moving house.

On a two-year tracker deal, remortgagers on a rate of 4.99% will pay £21 a month more than homebuyers, who will receive a rate of 4.73%.

Ms Bien added:

"Translated, Nationwide's change of policy means it can now offer more competitive rates for first-time buyers by charging others a higher rate."

Northern Rock and Alliance & Leicester still offer the same rates to all customers.

Stuart Bernau, an executive director of Nationwide, said:

"By making these changes, we will achieve greater flexibility and will be better placed to offer all our mortgage customers what they want."

Ray Boulger, technical director at John Charcol, said:

"This U-turn hurts the building society movement because Nationwide has been the most vocal in making claims about the benefits of mutuality. These claims now look rather hollow.

A large part of Nationwide's advertising was based around how good it was that they were a mutual. Now it seems that they are doing the same as what they criticise others for doing. It is hypocritical."

Adding:

"Nationwide claimed to pride itself on not discriminating against loyal customers. There can't be much pride left after today."

Money is the prime motivator here, customer care comes second.