Nationwide will not enforce collar

Nationwide will not enforce its 2.75% tracker collar and has reduced its SVR to 4%.

The mutual has taken the action following the reduction of Bank of England base rate to 2%.

The decision not to impose the floor means that all tracker mortgage customers will benefit from the full 1% fall in the Bank base rate and this is expected to be equivalent to £300m of member benefit over the lifetime of the Tracker products.

The standard variable rates of the Derbyshire and Cheshire building societies will also fall to 4.00% from January 1.

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.

Graham Beale, chief executive of Nationwide, says: “This condition on our tracker mortgages has been a feature of them for the past four years.

“It is clear, fair and reasonable that in the very challenging financial environment that many people are experiencing, waiving the floor in this way is the right and proper thing to do.

“The decision taken today by Nationwide reflects how, as a building society, we can be fair and offer good value to our members.”