Nationwide Remortgaging - beware?

CharlesO

Like many others I suspect I'm coming near to the end of my discounted deal with the Nationwide. I've received a couple of letters from them encouraging me to reserve and book my next deal from them.

Having done a little investigation I'm not sure this is a good idea. Customers with mortgages prior to 30th April 2009 have deals that revert to the Base Mortgage Rate (BMR) whereas taking out a new deal will in future revert to the Standard Mortgage Rate (SMR). The difference between the two is that the BMR has fixed limits on how it can vary from the Bank of England Base Rate.

The BMR is, as far as I can see as it is impossible to find details on the Nationwide website (I wonder why...), a very good deal. It tracks the Bank of England Base Rate at no more than 2% making the current rate 2.5%. The best introductory rate I can find for a new deal is 2.99%

There is the BBC Business report on this situation, google for "Nationwide axes mortgage promise" to find it as I had to re-register so can't post links yet.

As far as I can see I'm better off ignoring the "helpful reminders" and sticking with reverting the BMR.

Anyone else read this situation the same way?

_Andy_

That's all well and good for the immediate future.
However with rates going up in the future and fixed rate pricing increasing too, it's not always going to be an appropriate solution or suggestion for people requiring medium-longer term payment stability and security.

CharlesO

Agreed and I'm not trying to give advice as such.

However I think I effectively have the option of a +2% differential lifetime tracker for no reservation fee by my revert deal to consider alongside other options. That seems a good deal but I'm wondering if I'm missing something.

The suggestion I would make is to not assume your revert deal is going to be to your disadvantage.

_Andy_

Ah I see - fair point.

uiop123uiop123

CharlesO, My girlfriend and me are in the same boat. Our 2 year fixed rate with nationwide ends in August so was pondering what to do. According to their website, they offer a 3yr fixed at 4.59% (£995 fee) which is good I thought as we only have 7% equity currently. However, if rates stay low (less than 3% so the BMR is less than 5%) for a year or two then we'd lose out by fixing. It's a bit of a lottery....

T4LFR

Thats exactly what I did in December, let my fixed rate deal expire and moved on to the +2% BMR rate. Although obviously very cheap at the mo, I am not kidding myself that this is a long term solution... Its just when to jump ship to a fixed term deal - if someone would lend me a working crystal ball that'd be great.:D

gowgowuk

Hi,
Also in the same situation, Nationwide discount period ending in September and will be on the BMR. So, I'm either leaving it like that or remortgage with another lender, Nationwide being really not competitive enough. Seeing that the fixed rates mortgages are starting to go up, I'm tempted to gamble and fix (I think I can get 2.49% for 2 years or 4.24% for 5 years with HSBC, and these can be booked for up to 6 months in advance)
Philippe

lazysaver_2

This boat is getting a bit crowded as I am in it too!

Been breaking my head as to what do to over this - between staying on the BMR and taking a 5 yr fix at 4.69% with Natwest (£299 res fee). Am quite appalled at the fixed rates offered by Nationwide to existing cutomers and their high reservation fee - and they really couldn't care less if you leave them.

It is tempting to wait as I know it will take the base rate going up by 2.5% before I am better off on a fixed rate, but who knows how long this will take (probably about 12-18mths IMO), and what the state of the fixed rates will be at that time.

Ultimately the stress of worrying about when to fix might drive me a bit mad!

dimbo61

So the question you must ask yourself is
"HOW much will I save by paying 2.49% On the BMR
compared to 4.24% ( 5y fix HSBC) 4.59%(3y fix) 4.69%( 5y fix Natwest)
Will you sleep better at night knowing you have the same mortgage payment each month for the next 3/5 years !!

lazysaver_2

dimbo61 wrote: »

So the question you must ask yourself is
"HOW much will I save by paying 2.49% On the BMR
compared to 4.24% ( 5y fix HSBC) 4.59%(3y fix) 4.69%( 5y fix Natwest)

That's the question that keeps pulling me towards the BMR - I'd be forgoing a saving of £140 by fixing!!

Trying_to_be_good

Good advantage to being on teh tracker for now. But could you afford it if interest rates went up to 6, 7, 8%? Paying interest at 8, 9, 10% respectively? Fixes are likely to get more expensive as interest rates go up, it's a matter of when not if.

If you can afford for rates to rise quite a bit, fair enough. If you've not got much slack in your budget to cope with these higher rates, maybe a fix is for you. Only you can know! I'm ditching a +.18% tracker for a 5-year fix on a new house purchase, even though my tracker is portable.