I was interested to hear that Nationwide’s base mortgage rate has cost it £600m over the past 12 months. It jogged my memory about an email I sent via our BDM to the lender in October 2009.
My email suggested a way to shift a huge number of borrowers away from its bete noire the BMR.
The plan involved paying brokers a 0.20% product transfer proc fee to swap our clients to a competitive medium-term fixed rate. At the time a four-year fixed rate was 3.99%. Swap rates could have supported the rate at the time.
I suggested it might be better to tie borrowers to a rate they and the lender could afford, instead of one the lender couldn’t afford and borrowers could leave without impunity.
Apparently this wasn’t a problem at the time and since it hasn’t done anything about it, it obviously isn’t a problem now either. Shame we can’t all afford to let £600m evaporate into thin air.