Economy
Nationwide pulls tracker floor |
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| Written by Gary Howes | |
| Friday, 05 December 2008 | |
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Nationwide Tracker Mortgage will no longer have floor set as base rate reaches record lows.
Yesterday the Bank of England cut its base lending rate by another 1% bring the rate to the low last seen in 1951. Since the announcement all eyes have been on UK lenders - to see if they would pass on the cut to their customers.This morning Nationwide (LON:POB) officially announced it would drop its tracker floor from its current 2.75% to accommodate the unprecedented base rate. Political pressure has also been piled on lenders with Gordon Brown saying that he would flex his muscles to ensure the benefits were passed down to consumers and small business. Nationwide joins Barclay's whose Woolwich Union announced a full transfer of the cuts and the Bank of Scotland (LON:HBOS) which passed on the benefits to its business borrowers. However HBOS has come under fire today as it emerged Halifax was reluctant to pass on the cut. Details on Nationwide cut Nationwide’s Executive Committee met today to consider the Society’s position in relation to the 2.75% floor on its Tracker mortgage products and its Base Mortgage Rate and announced that it is not going to enforce its 2.75% floor on its Tracker mortgage products in a move designed to support borrowers in the current exceptional market conditions. The decision not to impose the floor means that all Tracker mortgage customers will benefit from the full 1% fall in the Bank of England Base Rate and this is expected to be equivalent to £300 million of member benefit over the lifetime of the Tracker products. In addition, following the decision by the Monetary Policy Committee (MPC) to cut the Base Rate, Nationwide Building Society today announces that it will decrease its Base Mortgage Rate (BMR) by 0.69% to 4.00% from 1 January 2009. The standard variable rates of the Derbyshire and Cheshire building societies will also fall to 4.00% from 1 January 2009. As Nationwide is holding its guarantee that BMR will never be more than 2% above the Bank of England Base Rate this means that if the base rate falls further, Nationwide will pass on further base rate reductions in full. Nationwide is one of only a few lenders to have this type of guarantee in place.
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