Nationwide to enforce floor / collar at 2%

neverdespairgirl

Nationwide, Britain's biggest building society, will not pass on any further cuts to the Bank of England base rate to customers with tracker mortgages, The Times has learnt.

The lender plans to invoke a rule in its mortgage contracts allowing it to freeze tracker rates when the base rate falls below 2 per cent, affecting more than 200,000 customers.

http://www.timesonline.co.uk/tol/money/property_and_mortgages/article5430130.ece

caracal_77

Yea, Nationwide customers won't be happy with this... They say this is to protect savers, I'd like to see if it actually does...

AHAR

caracal_77 wrote: »

Yea, Nationwide customers won't be happy with this... They say this is to protect savers, I'd like to see if it actually does...

I'm still happier than if they'd enforced the 2.75% collar though....

humfer

Just been reported on Sky as well, although nothing on the Nationwide press release site yet.

Will be interesting to see how they word it on the next letter they send out. "We previously said we were not enforcing the collar at 2.75%, however we have now changed our minds and it will be enforced at the current BoE rate of 2%"

I cannot complain though. The 2.75% collar was in all my documents when I signed up, so at least I have made an addition 0.75% worth of benefit than would have happened it they had enforced the rules of the agreement

Just read the Times report, and a couple of interesting points. Firstly Nationwide supposedly still committed to pass on any base rate cuts to it standard variable rates. Therefore if BoE rates go down to 0% then the NW variable rate will be 2%, the same as the collar for tracker mortgage customers (who have paid a product fee). Also it mentions that relatively new tracker customers have a collar of 1%, although this is obviously outwayed by the higher +% margins

Now also on telegraph's website. Looks all confirmed to me now and not just rumours

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/4061246/Nationwide-decides-not-to-pass-on-rate-cuts.html

Dick_here

We are talking purely about trackers here, right ? Not the SVR which is already the (maximum ?) 2% over base rate ?

MrMicawber_2

Why should the banks and building societies remove / waive the floors? I can't understand why people expect this as almost some kind of human right. All those on trackers signed up to them.

Sorry if I'm sounding unsympathetic but we just can't expect to have our cake and eat it.

kittykat8

Yes I agree if you signed up to trackers with floors, but the abbey stated specifically that the collar did not apply



Marion

MrMicawber_2

Regarding the Abbey product (and I don't know the detail) did they say:

There's an x% collar but it's never going to apply or

There's an x% collar and we'll apply it at our discretion or

There's no collar at all

OR:

Is there some confusion over the type of product it is?

Rick62

AHAR wrote: »

I'm still happier than if they'd enforced the 2.75% collar though....

I can't understand at all why they did not enforce the collar at 2.75% as they clearly stipulated in their KFI's. It's common sense that you need to offer a reasonable interest if you are to secure funds to lend.

kittykat8

they said in their offer letter that the term and conditions 13.6 which is in the booklet did not apply.

You can see this on previous threads and the other thead which is running

marion

Redbedhead

I was expecting Nationwide to enforce a 2% floor (as per the agreement I have with them) and was very pleased when they didn't but wouldn't have complained if they had, as they were perfectly entitled to do.

I think the problem is if they don't put some sort of floor in, they will have issues with interest rates offered to savers and we will end up with more banks having financial problems, which is not in the interest of the economy as a whole.