Nationwide to enforce floor / collar at 2%

Ian_Griffiths_Halifax

morrisoscar wrote: »

Advice please, no mention of a collar, so would NW have to pass on the reduction?

Your mortgage was offered before the FSA introduced the KFI and the corresponding version of the Offer Letter.

I'd suggest you take your Offer Letter to a Mortgage Broker who should be able to find the paragraph that states what interest rate you will go onto.

Incidently, I was looking at a case that was Offered in May 2004 on a 5 year Fixed Rate with Nationwide and it stated that they would go onto the Nationwide SVR (I can't remember what they actually called it but it meant their SVR) and that their SVR would be a max 2% above BoE Base Rate.

This was their Offer Letter though and yours may say something different.

Edit: The SVR is Nationwides BMR as per my next post.

Ian_Griffiths_Halifax

From today's Mortgage Introducer. This reinforces my findings yesterday on my clients pre Nov 2004 Offer Letter.

Nationwide reduces BMR


Friday 9th January 2009

High street lender Nationwide has announced it is set to pass on the Bank of England's base rate cut in full to its base mortgage rate (BMR) customers.

As a result of the BMR reduction – Nationwide's equivalent of the standard variable rate (SVR) – a borrower with the building society on a £150,000 interest-only mortgage could save up to £62 per month.

Nationwide subsidiaries Derbyshire and Cheshire building societies will also see their SVR drop to 3.5 per cent on February 1st.

Meanwhile, the mortgage lender has reiterated that its BMR will never be more than two per cent above the base rate, adding that further rate cuts will also be passed on in full.

The building society said: "Nationwide is one of a few lenders to have this type of guarantee in place."

Earlier this week, Nationwide claimed that house prices fell by 15.9 per cent last year – the biggest fall since 1991.

tartanterra

humfer wrote: »

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).

Don't know where you got that information from. I have a Current NW tracker (BOE Base + 0.33%), and have previously had two others. I have never paid a product fee.

sbracken

While I am glad that the 2.75% collar was waived, I am annoyed that there are now two collars. Loyal customers like myself have a collar of 2%, while a Johnny-come-lately who signed up for a tracker in December will have a collar of 1%. Thanks for nothing.

morrisoscar

Ian_Griffiths_Halifax wrote: »

Your mortgage was offered before the FSA introduced the KFI and the corresponding version of the Offer Letter.

I'd suggest you take your Offer Letter to a Mortgage Broker who should be able to find the paragraph that states what interest rate you will go onto.

Incidently, I was looking at a case that was Offered in May 2004 on a 5 year Fixed Rate with Nationwide and it stated that they would go onto the Nationwide SVR (I can't remember what they actually called it but it meant their SVR) and that their SVR would be a max 2% above BoE Base Rate.

This was their Offer Letter though and yours may say something different.

Edit: The SVR is Nationwides BMR as per my next post.

Thanks Ian,

Called into my local NW branch with my paper work today to be told the 2% floor does apply to me. When I asked if this was a change in the terms and conditions she said "yes". When I asked if they could do that she said "yes because we have announced it on our web site, however you can ring head office if you wish but we have got to look after savers and you already have a good deal as it is." I asked if I could pay the mortgage off without penalties because of this change to the T&C's she said "no penalties still apply until the end of the deal term."

Rang NW head office and asked them, kept me on hold quite a long time then came back saying there appears to be no floor on my deal (the first he had come across). So I should get the reduction, he also said I was correct in thinking they couldn't just change the terms and conditions by announcement on their web site.

If you have an old NW tracker like me it may well be worth a call. I think they also need to tell the staff in my local branch!

malcolmcoles

Ian_Griffiths_Halifax wrote: »

This Petition is ridiculous! Nationwide had a collar in their KFI and said they would remove it. They then went back on that but gave a lower collar than the original. These customers are not being treated unfairly, however, a Petition against lenders who are trying to do this with collarless deals would be justified.

I think I'm being treated unfairly!

Original application
I have an outstanding application for a tracker at base rate plus 1.69% (with a base rate floor of 2.75%). Just before Xmas I paid a reservation fee because the collar waiver meant that I was going to be better off sticking with that than with their then deals of base rate plus 2% (with a floor of 1%).

Relied on the waiver
However, they've now waived the waiver, not long after they introduced it. I complained at the time that it was impossible to work out what to do if they were going to make waivers of unspecified time periods. I certainly didn't imagine that they were to cancel the waiver that quickly.

Can no longer get the deal I could have get
Now I can no longer get the base rate plus 2% (with a 1% base rate floor) deal (they've moved to base rate + 2.49%). If I could get this 2% deal, I'd be on a rate of 3.5% next month.

I'l have to instead go ahead with the base rate plus 1.69% deal (2% base rate floor) leaving me paying 3.69%. If base rates are cut by a further .5% as predicted, I will still be on 3.69%, when I could have been on 3%.

Shoddy way to run a building society
So because the nationwide can't treat its customers fairly, can't make a simple decision about what to with its mortgages and stick to it, and announced a waiver on 4th December which it then backtracked on less than a month later, I'm stuck paying a higher mortgage rate than I need to.

If they were planning for the waiver to last less than 4 weeks, why couldn't they have said that at the start, then I would have taken out one of their other deals.

treliac

sbracken wrote: »

While I am glad that the 2.75% collar was waived, I am annoyed that there are now two collars. Loyal customers like myself have a collar of 2%, while a Johnny-come-lately who signed up for a tracker in December will have a collar of 1%. Thanks for nothing.

Suppose that's business. It's all about what you can get away with. Now people have caught on to the idea of collars, they're looking out for them and lenders could lose business. Bring back old fashioned integrity!

Geedoubleu_2

sbracken wrote: »

While I am glad that the 2.75% collar was waived, I am annoyed that there are now two collars. Loyal customers like myself have a collar of 2%, while a Johnny-come-lately who signed up for a tracker in December will have a collar of 1%. Thanks for nothing.

Your probably not doing the maths, thats why you feel annoyed.

I'm an existing customer and have a Bank of England Base Rate + 0.34% deal with a 2.75% collar, currently enjoying Nationwides special allowance I have a 2% Collar so pay 2.34%.

Johhny-come-lately can get a new tracker deal with a 1% collar, but its a BOE +2.49%, so they will currently pay 3.99% and if the BOE base rate drops to 1% it will be 3.49%.

So who has the better deal, me, the existing customer paying 2.34% or Johhny-come-lately paying 3.99%, at best 3.49%?????

Frances63

flyingbanana wrote: »

Is there a collar on the highest they can set rates? I am guessing there probably isnt!!!!

That's called a 'cap'.
Cap at top, collar at bottom (as on a head)

Ian_Griffiths_Halifax

malcolmcoles wrote: »

I think I'm being treated unfairly!

Original application
I have an outstanding application for a tracker at base rate plus 1.69% (with a base rate floor of 2.75%). Just before Xmas I paid a reservation fee because the collar waiver meant that I was going to be better off sticking with that than with their then deals of base rate plus 2% (with a floor of 1%).

Relied on the waiver
However, they've now waived the waiver, not long after they introduced it. I complained at the time that it was impossible to work out what to do if they were going to make waivers of unspecified time periods. I certainly didn't imagine that they were to cancel the waiver that quickly.

Can no longer get the deal I could have get
Now I can no longer get the base rate plus 2% (with a 1% base rate floor) deal (they've moved to base rate + 2.49%). If I could get this 2% deal, I'd be on a rate of 3.5% next month.

I'l have to instead go ahead with the base rate plus 1.69% deal (2% base rate floor) leaving me paying 3.69%. If base rates are cut by a further .5% as predicted, I will still be on 3.69%, when I could have been on 3%.

Shoddy way to run a building society
So because the nationwide can't treat its customers fairly, can't make a simple decision about what to with its mortgages and stick to it, and announced a waiver on 4th December which it then backtracked on less than a month later, I'm stuck paying a higher mortgage rate than I need to.

If they were planning for the waiver to last less than 4 weeks, why couldn't they have said that at the start, then I would have taken out one of their other deals.

See this post about a client of mine in a similar situation with them. The mortgage has now completed (Tuesda7 6th Jan) and the Nationwide underwriting department STILL can't confirm to me what the situation will be on any floor on this clients mortgage.

http://forums.moneysavingexpert.com/showthread.html?p=17218037#post17218037