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Economy

Nationwide base mortgage rate cut

Written by Gary Howes

Friday, 07 November 2008

Yesterday Nationwide cut tracker mortgages, today the base mortgage rate is finally cut.

Nationwide Building Society (LON:POB) has fallen in line with Lloyds TSB and Abbey and cut its base mortgage rate by the full 1.5%. Yesterday the Society announced it had cut its tracker mortgages by 1.5%.

The Bank of England's official rate was cut from 4.5% to 3% on Thursday in a move that shocked markets, and placed pressure on lenders to cut their rates for the benefit of the UK public.

Both cuts are effective from 1 December 2008. This after Nationwide yesterday announced an interim measure of withdrawing its tracker mortgage product range from sale at close of business (6 November 2008).

The BMR will decrease by 1.50% from 6.19% to 4.69%.

Nationwide’s BMR is already one of the lowest on the high street and this move will reduce monthly payments for a borrower with a £100,000 interest only mortgage by £125 a month.

Graham Beale, Nationwide’s chief executive said, “This is the right and fair course of action for Nationwide to take for all our borrowers at what is a very challenging time for everyone in the UK. Our borrowers, who already benefit from one of the lowest standard variable rates on the high street, will see their rates fall dramatically and will be substantially better off.

“As a member-owned mutual organisation we are not driven by the need to maximise profit. Without shareholders, we are driven by the needs of our members," continues Beale.

Savings rates are under review and any changes to these rates will be announced in due course.

Those banks that had not immediately passed on the benefits of the MPC rate cut yesterday were under fire today to pass on the rate cut. Gordon Brown said the government had met with bankers in a bid to ensure that lenders pass on the interest rates.

He said the Treasury and the Bank of England had taken action to help lenders and it was now their turn to take the lead.