Nationwide rethinks fixed and tracker rates

Nationwide last week increased its new customer fixed rates by 0.3 per cent and tracker rates by 0.2 per cent, while incentivising existing customers to stay.

Trinity Financial’s Product and Communications Manager Aaron Strutt says the rate rise may been related to delays in processing mortgage applications.

Nationwide’s service level agreement includes a processing period of 14 days which had risen to 17 days in July. Nationwide’s applicaiton to offer time currently stands at an average of 20 days while the average documentation assessment time is 10 working days.

He says: “It is unusual at the moment for lenders to increase their rates but when the average time from application to offering is 20 days, you can understand why they have done it. Normally, lenders in this position take a few weeks to clear the backlog.

“Over the last couple of months, they have been keen to get more business in and it has caught up with them now. Like a lot of the other lenders, they will raise their rates and in couple of weeks, they will lower them again when they’ve caught up with business.”

At the same time, Nationwide also announced that it was lowering mortgage rates to its existing customers in order to incentivise them to remain with the society.

For example, a two-year fixed rate is available to all existing customers at 3.39 per cent, at 70 per cent LTV compared with 3.49 per cent for new customers. And its five-year fixed rate is 3.59 per cent for existing customers compared with 3.69 per cent for new customers.

In addition, while its NewBuy rates for new customers will not be increased its NewBuy rates for existing customers moving home will be reduced by 0.10 per cent.

Nationwide head of mortgages Tracie Pearce says: “We wanted to give existing customers the clear message that their loyalty is valued. We are demonstrating this by offering them lower rates than those we offer our new customers. When other providers use their best deals to lure in new customers, it is reassuring to know that as an existing customer of Nationwide, whether you go to a broker or come to us direct, you will be offered our very best rates.”