Nationwide ditches 'same deals for all' policy

Nationwide ditches 'same deals for all' policy

	Published : Tue, 28 Nov 2006 11:05 By : David Simms Print this Story

LONDON - UK’s biggest building society, the Nationwide has decided to ditch the policy of offering the same deals for all customers regardless of whether they were existing borrowers or new ones. This policy was unveiled in March 2001 in a mega publicity blitz with Nationwide claiming that it was unfair to expect old customers to "subsidize" new borrowers.

However from 1 December, the Nationwide will change this policy to offer different rates to those who are borrowing to buy new homes as compared to those who are simply remortgaging their old ones. The Nationwide said that it was confident that the new changes would ensure that borrowers get a better deal.

Starting December, customers who remortgage their homes will have to pay 0.1 percent to 0.25 percent more than new borrowers. "These changes enable us to offer really competitive mortgage deals to customers whether they are changing home, changing lender or changing their deal," said Nationwide executive director Stuart Bernau.

Under the new scheme new customers who take out a mortgage to finance a new home, would be offered an interest rate of 4.73 percent per year. Existing customers who want to remortgage or take out another loan or new customers who want to move their home loans from another providers will be charged an annual interest rate of 4.99 percent.

Analysts and market watchers were dismayed at the U-turn by Nationwide. In its advertisements, Nationwide criticizes other lenders who offer a different rate to new customers and old ones.

Ray Boulger, technical director at John Charcol felt that the move sent out a wrong message. “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," he said.

“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 criticize others for doing. It is hypocritical," he added.

The new scheme puts Nationwide on an even footing with Halifax and Abbey, who offer different deals for new and old customers. Lenders still offering same deals for all customers include Northern Rock and Alliance & Leicester.